Financial crime in New Zealand: what to expect in 2023?
New Zealand is home to more than 4 million people, and its economy is constantly growing. The country lacks talented people across various industries. Managing financial crime is a challenge for the government in the absence of people that specialise in curbing financial crime. This has led to increasing demand for talent in this area, and one solution is by tapping into the contingent workforce pool. This insight highlights financial crime challenges in New Zealand and the steps that should be taken.
What can financial crime departments expect?
According to the latest PWC report, New Zealand is expected to see a significant increase in financial crime in 2023. The report states that this is due to increased cybercrime and fraud as well as a growing number of people who do not know how to protect themselves from financial fraud.
The report also suggests that banks are likely to increase their investments in technology and cybercrime experts because they fear they could lose customers if they do not keep up with new technological developments in this area.
In terms of regulations, regulatory standards are expected to rise in line with FATF recommendations to prevent money laundering and terrorist financing.
As New Zealand has been a member of the FATF since 2000, it is required to implement policies and regulations that help prevent money laundering and terrorist financing. The FATF’s recommendations have been adopted by the New Zealand government, and private organisations also need to do this
New Zealand and the global fight against financial crime
In the pursuit of fighting financial crime in New Zealand, the government is keen to take an international stance, as global, financial crime landscapes are changing and evolving at a rapid pace. In 2023 it will be important for businesses to stay ahead of these changes so they are not caught out by new threats or risks.
Three emerging priorities for government and regulators will be key for financial crime compliance teams to make a note of. They are as follows:
- Keeping up with these pressures by leveraging technology. For example, New Zealand needs to develop a workforce strategy that includes an increase in the number of people with skills in cybersecurity and data science as well as more training programme for employees who deal with cybercrime issues. This will help companies stay ahead of emerging threats like phishing scams and malware attacks on their networks.
- Finding solutions within current legal frameworks (if possible). The law currently only allows enforcement agencies to go after individuals who have been convicted of certain crimes like fraud or money laundering—but it does not allow authorities to search any property they own unless they’ve been convicted first! As such, new laws may need to be created so that any other types of financial crimes can be investigated without having their finances frozen until trial days later.”
- One particular trend expected is an increase in crypto-enabled fraud as well as cyber-related money laundering. Cryptocurrency is a new form of currency that has been around since 2009, but it’s not regulated in the same way as traditional currency, which means it can be used for money laundering.
Getting AML/CFT compliance right with Momenta
Every component of your compliance operation needs rigorous improvement, and compliance teams are already under much BAU pressure. A consistent challenge and issue with getting compliance right is that every aspect of your compliance function needs thorough review and improvement, and with compliance teams already under significant BAU pressure, many find it difficult to have a true view of what additional improvements need to be made, and often in a quick turnaround period.
Contingent resource teams can ensure a ‘no stone is left unturned approach’, and in a highly pressured regulatory environment, hiring contingent resource can make a vital difference in understanding the weaknesses of your risk assessments, as well as setting up concrete plans to resolve them.
Risk assessments will require in depth analysis of all controls. Many businesses however fail to assess specific risks that can in-turn lead to inaccurate business-wide risk assessment. Often, the main contributing factor to this, is that many compliance teams are understaffed and do not have the internal capacity to ensure that any weaknesses are clearly and fully acknowledged and addressed.
CDD is one area of investigation that is often not adequately performed. As simple as the processes may be, many banks and other financial institutions still do not get it right. Many turn to automation to address these gaps, but the reality remains that appropriately skilled resource is vital to oversee the technology itself. In many cases, transaction monitoring alerts specifically require strengthening, and this can only be achieved by the right mix of people and technology.
You can automate systems and processes, but you still need people. Technology automation can of course help with repetitive and relatively mundane tasks, but people can and must oversee automation, as well as ensuring that informed and accurate decisions are being made. What is needed, now more than ever, is a combination of a people plus technology solution. Automation of your current AML processes and systems can only take you so far – they need to be purposeful, and the right people will very much be needed to achieve this.
Financial institutions and non-financial organisations in New Zealand have used the ability to hire contingent workers. Their use has been instrumental in helping these organisations deal with regulatory pressures and compliance risks.
Using the expertise of contingent resourcing can offer many firms breathing space in terms of resolving any issues their AML controls may have. Setting up the right teams to ensure any gaps are found will be key for firms this year as regulators place more pressure on financial service participants to strengthen current compliance systems and controls.
Organisations like Momenta Group are addressing genuine issues in AML/CFT based on 30 years of experience collaborating with small and large companies. The solution to common compliance concerns is an experienced outsourced workforce. Momenta is ready to provide a small or large contingent team to big and small companies. We offer skilled and experienced industry experts with in-depth knowledge about the continuously changing requirements of various sectors.
