Who's Responsible for Stopping Financial Crime, Corporates or Banks?

Fraud and Financial Crime

James Richardson

James Richardson

Sep 29, 2020

For the last few years, the subject of Financial Crime has been brewing across corporates. A combined demand is emerging to know not just if a payment is potentially fraudulent, but also if it’s complicit with financial crime. This cross-check is a significant development and welcomed by many of the regulators who want to see corporates taking more responsibility in their payments, not just relying on the banks, which in many cases is just too late in the process. However, this has not always been the case.

Back in the 2019 Payments Barometer, we discovered that a little under three quarters (70%) of financial decision-makers agreed that responsibility for sanction checking was with the banks. We knew then that this was not a sustainable precedent, and in 2020, fortunately, we see the market shifting.

In this year’s report, 56% of financial decision-makers agreed that responsibility for sanctions rests with the banks, a significant drop of 14% year on year. This drop may stem from a declining perception that banks are the entities most impacted by anti-money laundering regulation. In 2020, we also saw an 11% drop in agreement among decision-makers that it is banks who face the most significant impact of anti-money laundering regulations (down from 71% in 2019 to 60% in 2020).

Positively, corporates are not sitting back and waiting for something to happen in the industry. The 2020 Payments Barometer has revealed that businesses are ready to share the load with 71% of decision-makers suggesting they are prepared to take on more responsibility for implementing anti-money laundering regulations. However, there is some variation by business size, with decision-makers in enterprise organisations more open to this idea compared to small businesses (79% and 62% respectively).

This “willingness” to share responsibility is underpinned by the EU’s 5th Anti-Money Laundering Directive (AML5) which came into effect in January 2020. This regulation requires enhanced due diligence for all business relationships in high-risk countries, as well as new requirements on the clarity and endorsement of electronic verification on Politically Exposed Persons (PEPs). Overall, a large proportion of those researched welcome the opportunity to protect business payments and be held accountable. Whether this is due to reputational risk, commercial losses, legislation, or other factors requires further research.

As companies think differently about how they make payments, they can no longer be reliant on their bank to provide their payment defences and keep them compliant with the law. Different banks and Payment Service Providers (PSPs) may have different approaches, and corporates now realise they can take this into their own hands, which not only gives them better control and comfort but helps them to protect cash-flow in the event of withheld payments.

2020 Business Payments Barometer

To see all of the results revealed by this year's survey, including responses about real-time payments the top drivers of payments, download the full 2020 Business Payments Barometer.


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Related topics

Financial Crime
James Richardson

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James Richardson

James Richardson has 15+ years’ experience in payments, working with FIs and Corporates to secure critical payments and reduce fraud risk. James is Head of Market Development, Risk & Fraud, for Bottomline Technologies.
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