Four steps to a successful financial crime investigation

13 February 2019

We often work with our Financial Services clients on internal investigations into allegations of financial crime. And we’re finding that several factors—including advancing technology, the rise of the corporate trust agenda and a stronger emphasis on project governance—are driving a subtle shift in how these investigations play out successfully. As a result, we believe investigations in 2019 should follow four steps to maximise their chances of success.

1. Think deeply—and think ahead—when setting objectives

In any investigation, better questions produce better answers: the quality of the end product is influenced as much by the way the objectives are defined as by the detective work itself. Investing time up front in defining and agreeing the overall objectives (or ‘investigation hypotheses’) will embed a far-sighted perspective and help to ensure that the distinct lines of enquiry are coordinated effectively. That said, as new demands emerge from various stakeholders, the hypotheses will need to be refined to keep the investigation on track.

We’re glad to say that we’re seeing the importance of clear objectives reflected in the approach taken by investigation leaders. In particular, they’re increasingly testing micro-decisions taken by the investigation team against the overarching objectives. This is a valuable discipline, and a good way both to test the original objectives and make any necessary adjustments quickly

2. Learn from project support models in other industries

On larger investigations, we’re seeing a growing focus on project delivery as opposed to ‘just’ project management—a shift that can affect the type of support models that investigations apply. Picture a moment in the middle of the investigation when multiple work-streams are underway, requests from regulators are competing with ad hoc queries from counterparty banks, new lines of enquiry are being identified and data dependencies require verification.

Amid this maelstrom, is the investigation benefiting from the best practices that projects in other industries—the likes of engineering—use to ensure confidence in project delivery? It should be. Looking to other industries can help to put effective project delivery management at the heart of a complex investigation.  

3. Balance data analytics with data quality

Innovations around artificial intelligence, machine learning and automation continue to grab the headlines—and the range of data sources being input into investigative analytics platforms will continue to expand. However, amid this proliferation of data, it’s vital not to lose sight of data quality: the provenance, existence, completeness and accuracy of the information itself. No matter how sophisticated the analytical tools, the value and reliability of the outputs will only be as good as the inputs.

We’re encouraged to see data quality moving up the priority list on investigations, with more effort being made to establish a complete picture about the data. What data is available and accessible—and if it’s not, why is that, and what are the impacts? Such questions reflect the emergence of data (not just its collation and analysis) as an identifiable work stream with its own outputs and reporting.    

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4. Prioritise trust and value protection to ‘emerge stronger’

Building trust with customers, shareholders and employees is more important than ever—and never more so than when events warranting investigation arise. We’re seeing increasing efforts to build resilient investigation strategies prioritising an ‘emerge stronger’ agenda that equates maintaining trust with protecting value.  

In the past, investigations involving public allegations or whistle-blowers could be conducted in a relatively static, predictable environment. No longer. In a social media-dominated world, investigations are more dynamic and visible. While this can present a short-term crisis for an organisation, it also creates an opportunity to emerge stronger—for example by openly acknowledging what went wrong and demonstrating that remedial action is taking place. This means the organisation thinking about the trust that has (and could be) lost, can send clear, authentic messages about how it’s meeting society’s expectations.

Conclusion: pointed questions need strong answers

Today, stakeholders are asking ever more pointed questions of organisations as they carry out investigations.  The four steps we’ve set out will ensure they’re better placed to demonstrate quality in their responses—while also helping to ensure their investigations get to the real truth.

Christian Butter

Christian Butter | Partner
Profile | Email | +44 (0)7841 498581

Harry Holdstock

Harry Holdstock | Director
Profile | Email | +44 (0)7706 284348

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