Financial Crime Operations: Realising the full benefits of Execution Managed Solutions

November 09, 2020

by Christian Butter UK / EMEA Financial Crime Services Leader, PwC UK

Email +44 (0)7841 498581

by Mark Loring Senior Advisor, Financial Services, PwC UK

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The large effort put in by financial institutions in the UK and globally to perform their anti-financial crime defence and detection programmes is well documented. Over several years, we’ve seen anti-financial-crime operations grow in size to meet the increased, and constantly evolving, regulation and to meet the changing needs of the business.

Conducting business with integrity and respecting the regulatory, ethical and social responsibilities in protecting customers and business partners can absorb resources. Add to that supporting governments, regulators, and law enforcement, and the result is an extensive set of operational processes, interventions and tasks. None of which add inherent value to the business itself.

What interests us is the process excellence, and the capacity and means by which that functional operation can be transformed and optimised. As we talk to our clients across multiple territories and operating globally, it is clear that balancing efficiency and effectiveness in anti-financial-crime operations is a common challenge:

  • Achieving transformation while ensuring business critical activities continue uninterrupted
  • Managing a remote workforce while maintaining productivity
  • Keeping abreast of regulatory changes and ensuring they are enshrined in policy where relevant
  • Aligning regulatory obligations with customer and business strategies
  • Managing compliance costs against the ability to demonstrate a robust financial crime operation
  • Focusing front line operations activities to ensure they support the central risk assessment effort.

Execution Managed Solutions: make your trusted advisors work harder

One potential strategy for transforming operations is to use an Execution Managed Solution provider to take on some of your processes. Execution Managed Solutions take care of all, or parts of, Financial Crime Operations – picking up the complex, heavily manual, external data dependent, incremental processes and tasks of, for example KYC, sanctions screening and transaction alert investigations.

But in contrast to traditional outsourcing, Execution Managed Solutions are about a lot more than simply transferring the burden. Improvement is also key. To ensure processes are as good as they can be, it is critical you draw on the expertise of providers who can offer financial crime subject matter expertise and operational capability, best in class technology and data expertise. Leverage your external partner to transform retained processes through intelligent investment in automation and other technologies that spur continuous improvement. Allowing you to focus resources where they are most needed, improving risk coverage.

Getting the transition right

If you decide to consider an Execution Managed Solution, it’s important to set realistic expectations and prepare effectively for the transition:

  1. Sort out the broken processes: Make sure you’re working with someone who can help you to distinguish regulatory remediation from underlying process issues that need to be resolved.
  2. Don’t just focus on cost: Be clear that compliance should never be compromised. Explore solutions that will help eliminate costs, while realising the benefits from process optimisation in areas such as straight through processing, global consistency, quality and strong risk coverage.
  3. Apply technology smartly: Understand your operational technology needs and how they integrate with your business. Execution Managed Solutions providers can shoulder the expense of keeping their systems up to date so you don’t have to. But you do need to understand your business requirements.
  4. Strengthen accountability: Work towards robust accountabilities across the first and second lines, supported by a clear location strategy and centralised control where possible. This also supports the hand off to Executed Managed Solutions.
  5. Optimise third-party arrangements: Plan how and then proactively manage the different third-parties you’re already working with to work together in the most effective way.

What are we seeing?

Execution Managed Solutions offer a way to manage cost and process efficiency pressures. By partnering with a provider who has a long term investment in the success of your Financial Crime Operations, you can focus on higher risk mitigation activities as your repetitive processes are being managed and enhanced.

We also believe that the decision to consider the adoption of Execution Managed Solutions is best done in parallel with process improvement. By examining processes from an output and value perspective and using analytics, there will be opportunities for improvement and potential for genuine added value.

If you are looking to understand the benefits of an Execution Managed Solutions to enhance your Financial Crime Operations, or are interested in how Execution Managed Solutions can be a part of your process improvement efforts, please feel free to get in touch.

With contributions from Dan O’Sullivan and Alison Marky of PwC’s anti-financial crime advisory team.

For more, please visit Execution Managed Solutions.

To read more about the new generation of Execution Managed Solutions, read Mike Gibbons' Fit for the Future today blog.

by Christian Butter UK / EMEA Financial Crime Services Leader, PwC UK

Email +44 (0)7841 498581

by Mark Loring Senior Advisor, Financial Services, PwC UK

Email .