How UAE institutions can hit the gold standard in financial crime compliance and investigations

Adherence to strong data practices is critical

By Nick Athanasi, David Beck and Abi-Gail Marshman

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Published: Tue 28 May 2024, 9:32 PM

As global financial systems become increasingly interconnected, it becomes even more vital to build robust preparedness programs and leverage full-scale compliance technology to guard against and investigate financial crimes.

The UAE, which has rapidly progressed to become a financial nerve-centre and a hub for global investors, is at the forefront of efforts to guard against, prosecute and investigate financial crime – a highly complex process that seeks to find level with stringent international benchmarks. Given the UAE’s status as a global force, along with the high solvency and liquidity of its economy that continues to attract investors and residents from around the world, it is imperative to safeguard its financial system from financial crimes.


That’s the reason the UAE has proactively forged a compliance framework by leveraging modern technology to facilitate the detection of suspicious transactions, and the investigation and prosecution of financial crimes. Its efforts have been acknowledged by major international agencies such as the Financial Action Task Force (FATF) and the Middle East and North Africa Financial Action Task Force (MENAFATF).

In keeping with that national agenda and the push for increased scrutiny on transactions, it is imperative for financial institutions in the UAE to harness efficient financial crime compliance and investigations preparedness. This task requires a structured, well-informed and data-driven approach guided by five parameters: data awareness, response planning, data quality control, defensibility, and enabling time efficiencies.


The key element here for financial institutions in the UAE is to achieve the gold standard of rigour and sophistication in tackling financial crime and follow international benchmarks. At the heart of that aspiration lies the adherence to strong data practices, without which financial services are exposed to compliance violations, data privacy failures, and the potential of excess risk and cost when an investigation arises.

Data awareness

This is one of the most critical parameters, where organisations must priorities the development of a transparent data landscape. As part of that, conducting a data mapping or inventory exercise will bring clarity to the sources of information across the organisation, how they generate, store and share information with other systems, what data types are sensitive or need additional controls, and what business functions and policies are in place around them.

In addition, detailed data awareness will provide the foundation needed to begin implementing archiving processes that meet regulatory and business needs. The data map must also provide guideposts for where legal teams need to focus data collection and review when an investigation arises.

From left: Nick Athanasi, David Beck and Abi-Gail Marshman
From left: Nick Athanasi, David Beck and Abi-Gail Marshman

Response planning

A response plan is essential in creating efficient pathways to investigate financial crimes. The plan should clearly outline the steps that will be taken to contain information when an investigation begins and the external advisors who will be called upon to quickly support data preservation, collection, analysis, and so on.

Data quality control

Complementing the focus on data awareness, organisations must also ensure that a high standard for data quality is maintained across all sources, in addition to data mapping and containing data volumes through defensible retention and disposal programmers.

A vital aspect of this is the ownership of systems, which should be clearly documented. Any overlap between data should be limited and controlled. In cases of fraud or financial crime investigations, clear and accurate data sources, patterns and functions are essential to enabling identification of potential anomalies in activity patterns, to signal where something might be amiss.

Defensibility

This is a significant step that can spell the difference between success and failure for financial institutions, and hinges on their readiness. Investigations must be approached with the expectation that the results may come under scrutiny, and organisations must be ready to initiate and swiftly follow defensible forensic procedures as soon as an issue arises. This includes ensuring that data preservation is handled by or at least under the guidance of professionals and not solely left to the internal IT function.

While institutions in the region might find such an approach excessive, there have been high-profile cases in the Middle East in which courts and government authorities have contested the authenticity of electronic evidence. Therefore, to ensure defensible outcomes, digital forensic experts should be involved every step of the way to uphold the highest possible standards for the processes used to identify, extract and review electronic data.

Enabling time efficiencies

Financial crime investigations are high-pressure, time-sensitive matters, and evidence must often be produced to courts in a matter of days or weeks.

Readiness to do that requires data awareness and understanding of key facts around issues of potential concern. Having repeatable investigative tools, providers and processes in place, and experts who can apply advanced analytics to quickly find information amid large volumes of data, is also essential.

Final thoughts

Harnessing the fundamentals of effective investigations has become a critical necessity for UAE financial institutions, as the nation continues to grow in geopolitical stature and matures into a sought-after investment destination. As the data landscape grows increasingly complex, the way forward is to improve organisational scrutiny and update investigatory processes to promote transparency, accountability, and trust in the financial sector.

Nick Athanasi is Head of Technology EMEIA, FTI Consulting. David Beck is Managing Director, FTI Consulting, Technology. Abi-Gail Marshman is Senior Managing Director & Head of Financial Crime Consulting – Middle East & North Africa, FTI Consulting



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