Malverde Ventures into Transforming Financial Crime Prevention
Founded by Richard Elliot-Cooke, Simon McMahon, and Spaden Elmhirst, all renowned in the field, Malverde is dedicated to helping financial institutions comprehend and mitigate vulnerabilities exploited by criminals through optimized risk management models.
The UK: Epicenter of Financial Crime
The UK faces rampant financial crime, with 73% of adults falling victim to scams, leading to significant monetary losses. Billions of pounds are laundered through the financial system annually, facilitating crimes like human trafficking and drug trade. Some UK businesses inadvertently aid Russian sanctions evasion through increased exports to neighboring countries.
Beyond Regulatory Compliance
Financial institutions in the UK are burdened with stringent anti-financial crime regulations, encompassing diverse and complex requirements. For instance, starting October 7th, payment firms must reimburse scam victims, a move by the Payment Services Regulator (PSR) to protect consumers, albeit escalating compliance costs. However, most scams originate from social media or telephone channels rather than banking apps, suggesting ongoing challenges.
Currently, the UK financial sector spends £35 billion annually on compliance with limited impact on criminal activities. Malverde contends that regulators and financial institutions should pivot from mere compliance to comprehending criminal behavior to effectively thwart it. By focusing on how criminals exploit their services, institutions can leverage technology and analytics more effectively for crime prevention while achieving regulatory compliance incidentally.
Shifting Paradigms
Financial institutions typically deploy extensive teams to navigate fraud and compliance requirements, often conflicting with their commercial goals. Many firms prioritize demonstrating compliance over addressing the root causes of financial crime, until regulatory enforcement compels action.
Malverde advocates for a collaborative approach between regulators and businesses to innovate strategies for crime prevention, moving beyond conventional enforcement-focused measures. Their goal is to guide the industry towards proactive crime prevention strategies rather than reactive compliance measures.
