March 18, 2021

The COVID-19 pandemic rapidly accelerated digital transformation efforts for most organizations. The trend that began as a forced necessity at the emergence of the pandemic has evolved into an enduring market reality that is here to stay for 2021 and beyond. Our webinar “AML/CTF: Trends, Developments and Enforcement Actions to Guide Companies in 2021” explores the implications of a digital-first approach to compliance.

Pandemic realities pushed digital transformation into overdrive

Digital transactions with U.S. merchants grew 44% in 2020 amidst the global pandemic, totaling over $861 billion.1 The shift toward digital commerce was already well underway, but the COVID-19 pandemic significantly accelerated the trend by years, seemingly overnight. Digital channels now carry a significant portion of transactions, changing the way businesses interact with customers, and forever changing how customers expect to conduct business moving forward. As consumers solidify their digital commerce preferences, businesses need a strategy that balances exceptional customer experience with effective compliance.

Digital commerce increases risk exposure and regulatory oversight

Digital commerce creates a hospitable climate for financial criminals to thrive and evade detection for money laundering, sanctions risk and fraud. Bad actors capitalize on anonymity, accelerated transaction speeds and inter-connectivity across multiple channels to aggressively target businesses for financial crime schemes. Global regulatory focus has specifically expanded to include e-commerce and non-financial institution corporations in response to increased financial crime over digital channels. Several recent OFAC enforcements have specifically focused on digital identity, highlighting its largely untapped potential to mitigate these growing e-commerce compliance risks.

Disparities between the dynamic pace of digital commerce and a retroactive approach to risk management create opportunities for financial crime and sanctions evasion to flourish. Operating with partial risk visibility rooted solely in physical identity impedes the productivity and effectiveness of compliance teams while introducing friction into the digital customer experience. It may also expose organizations to regulatory enforcements and reputational damage.

Pandemic-driven pressures further complicate compliance

The pandemic is playing a dual role in providing the ideal incubator for financial crimes and sanctions evasion. First, COVID-19’s initial impacts rapidly accelerated digital transformation to a point that left many businesses reeling. Additionally, the resulting remote work environments created roadblocks for compliance teams to efficiently and cost-effectively complete due diligence. Our 2020 True Cost of Financial Crime Study provides additional insights into the effects of COVID-19 on key compliance activities.

Combining these challenges with the shortcomings of applying a traditional risk management approach within a digital commerce environment creates decisioning delays, overwhelms compliance teams and frustrates customers. Even worse, these scenarios contribute to missed chances to proactively prevent money laundering and sanctions evasion.

Move beyond digital challenges to capture competitive advantage

Digital commerce demands a more dynamic, risk-responsive approach to compliance, with digital identity intelligence as the centerpiece of a real-time view of risk. Incorporating digital identity intelligence – including a variety of available location intelligence – into due diligence sanctions screening provides prompt risk visibility that can help detect suspicious anomalies, recognize trusted customers, and detect potentially suspicious behavior in milliseconds to reduce false positives and create much-needed improvements in efficiency and customer experience.

As 2021 progresses, digital transformation will continue accelerating and opening more avenues to engage with customers and build revenue. Maximize this market reality with the advantage of a unified, near real-time identity view that immediately informs confident compliance decisions so you can concentrate on trusted customer interactions and your core business.

Watch our webinar for complete details on the impact of accelerated digital transformation on financial crime compliance. You can also take the opportunity to learn about other AML/CTF trends, developments and enforcement actions from additional webinar presenters.

Interested in integrating digital identity intelligence into your strategy? Our solutions combine digital identity network intelligence, world-class global sanctions and enforcements data and intellectual property to deliver a unified view of identity and sanctions risk in near real-time to reduce false positives, create efficiencies and improve the customer experience. Immediately increase the effectiveness of e-commerce compliance and reinforce risk perspective with contributory, crowdsourced data from more than 35 billion global transactions annually. Connect with us to learn more.

1. https://www.digitalcommerce360.com/article/us-ecommerce-sales/