The Laundry6 Feb 2023

E45: How effective are neobanks' financial crime controls?

In 2022, the FCA (Financial Conduct Authority in the UK) raised the possibility that criminals may take advantage of the speedy onboarding process of challenger banks (neobanks), mainly to create money mule networks.

Their report also noted that challenger banks advertise the ability to open accounts quickly, which may lead to insufficient information being gathered on higher-risk customers during the account opening process.

Consequently, the FCA reviewed the financial crime controls of a sample of challenger banks that compete with traditional retail banks.

In this episode, we will, together with one of the leading experts in the field, James Nurse from Fintrail, a specialist consultant firm in the financial crime space, explore the risks associated with challenger banks and how traditional retail banks are faring in comparison.

We'll also look at the financial crime controls amongst the challenger banks to better understand the situation.

From this episode, you'll learn:

01:39 - 02:42: What led to the need for a review of challenger banks' financial crime practices?

02:42 - 05:25: Critical weaknesses identified by FCA

05:25 - 06:58: How challenger banks can adapt customer risk assessment & EDD for the heightened risk of sanctions evasion

06:58 - 08:55: How challenger banks & traditional banks differ in legislation they must comply with

08:55 - 09:57: What guidance is available to challenger banks to help meet AML/CTF obligations

09:57 - 11:24: What technologies are available to help

11:24 - 12:43: James' top tips

12:43 - 14:12: Why a compelling financial crime change program is crucial

14:12 - 15:27: What challenger banks should expect from the FCA in terms of monitoring their compliance with the AML regulations in 2023

15:27 - 16:49: What risk controls are the challenger banks usually good at—and maybe even better at compared to the traditional banks?

16:49 - 19:44: How you can balance the need for robust KYC with a seamless customer experience

19:44 - 21:15: How the KYC process for challenger banks differ from traditional banks

21:15 - 24:22: Why "Effectiveness" continue to be a big 2023 compliance trend

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