Financial intelligence units (FIUs) – sometimes known as financial crime units (FCUs) – are in-house or contracted teams of investigators tasked with uncovering financial crimes within organisations.
FIUs help institutions protect themselves against criminal activity, including money laundering and the financing of terrorism, and ensure they’re meeting the relevant regulatory obligations. They support government bodies such as the Financial Crime Group here in New Zealand, which feeds into the global Financial Action Task Force.
Why do FIUs exist?
As businesses pivot toward digital models, more data is generated and shared – which means a higher level of exposure to digital crime. This is particularly apparent within the banking sector, where reducing fraud is typically a top-tier organisational priority.
In response, governments all over the world have introduced legislation to detect and prevent financial crimes, with a focus on money laundering and financing of terrorism. These laws require financial institutions to meet regulatory standards and report suspicious activity. New Zealand’s Anti-Money Laundering and Counter-financing of Terrorism Act is one example.
FIUs provide financial institutions with a dedicated resource in the fight against financial crime and help them meet their legal obligations. Many larger institutions will have an in-house FIU, while smaller financial service providers may work with outside contractors.
What are the benefits of working with an FIU?
FIUs specialise in helping businesses comply with anti-money laundering and countering financial terrorism (AML/CFT) regulations, as well as streamlining internal processes to make compliance more efficient. Using an external FIU gives your institution access to experts who are purely focused on AML/CFT measures.
The key benefits of working with an FIU are:
- Efficient ‘know your customer’ (KYC) processes – FIUs will recommend and help implement a KYC process that is relevant for an individual institution’s risk level.
- Transaction monitoring – tracking and analysis of large volumes of data are key priorities for FIUs. They typically have robust, efficient systems to process data so that issues can be flagged and dealt with quickly.
- Focus on technology – keeping up with continually evolving technology is critical to FIU success. This covers both cybersecurity measures and increasing efficiencies in internal processes (such as machine learning).
- Compliance knowledge – regulatory change across the financial sector happens rapidly. Keeping up with this, and tweaking systems accordingly, can be challenging. FIUs make regulatory compliance a key focus, and work to keep up with global standards as they change.
- Beyond core compliance – many FIUs go beyond regulatory box-ticking by offering systems and services that provide extensive protection against losses and reputational damage.
Convenience, complexity and expert care
While financial institutions offer services that are more convenient than ever, today’s digital ecosystem comes with increased risk. Ensuring your business is one step ahead can be challenging in a complex, rapidly-changing landscape, which is why working with a dedicated, knowledgeable team has huge benefits.
If you’re looking for advice and assistance with your AML processes, contact First AML today.