{"id":566177,"date":"2022-11-23T06:51:39","date_gmt":"2022-11-23T05:51:39","guid":{"rendered":"https:\/\/ibsintelligence.com\/?post_type=leadership-interview&p=566177"},"modified":"2025-01-16T06:52:56","modified_gmt":"2025-01-16T05:52:56","slug":"fireside-chat-countering-financial-crime-in-banks-krishan-grover-chairman-of-leading-technology-services-provider-and-rivi-varghese-founder-ceo-of-clari5","status":"publish","type":"leadership-interview","link":"https:\/\/ibsintelligence.com\/leadership-interview\/fireside-chat-countering-financial-crime-in-banks-krishan-grover-chairman-of-leading-technology-services-provider-and-rivi-varghese-founder-ceo-of-clari5\/","title":{"rendered":"Fireside Chat: Countering Financial Crime In Banks, Krishan Grover, Chairman of leading technology services provider, and Rivi Varghese, Founder CEO of, Clari5"},"content":{"rendered":"

In a candid conversation between Krishan Grover, Chairman of leading technology services provider, Grover and Rivi Varghese, Founder CEO of category leading real-time banking financial crime management technology solutions, Clari5 interpret what the new regulation means for the Philippine banking sector and the way forward.<\/em><\/p>\n

\"\"<\/p>\n

Financial institutions (FIs) regulated by the Bangko Sentral ng Pilipinas (BSP) are now required to have an automated and real-time fraud monitoring and detection system to address the growing incidents of frauds. BSP recently issued circular number 1140 as an amendment to the IT Risk Management Framework.<\/p>\n

BSP wants the FIs\u2019 automated fraud monitoring systems, as well as their AML system, to be integrated so as to have a cohesive and comprehensive financial crime prevention system. The circular is expected to lessen losses from fraud and cybercrimes, and boost the central bank\u2019s bid to further increase digital financial transactions in the country.<\/p>\n

Grover \u2013<\/strong>\u00a0The Philippines is experiencing massive transaction volumes. From over 21 mn transactions amounting to PHP 1.3 trillion in 2021, the volume and value of PESONet transactions reached over 26 mn to PHP 2 trillion, respectively, to date and InstaPay volume as of end-April this year grew by 32.7% to 166 mn from 125 mn transactions in the 1st<\/sup> 4 months last year. While this is encouraging, isn\u2019t there a need for banks to simultaneously further fortify their anti-fraud defenses? What are your views?<\/p>\n

Varghese \u2013<\/strong>\u00a0Absolutely. While the shift to digital is quite encouraging, the surge in transaction volumes also warrants a key question \u2013 are banks doing enough to secure the transactions? For instance, credit card fraud in Philippines went up by 21% even as online transactions are growing exponentially. While the BSP continues to ensure that systemically important payment systems follow standards that are at par with global practices to ensure safety and reliability, the onus lies on each and every bank to implement the regulatory mandate in letter and in spirit.<\/p>\n

Grover \u2013<\/strong>\u00a0True. In fact the BSP has asked for a holistic and coordinated approach among industry players to ensure that funds cannot be easily siphoned off by fraudsters and cybercriminals. In line with this, the BSP will continue to engage with relevant stakeholders to ensure that policy frameworks and supervisory actions are effective and responsive amid a fast-evolving cyber security environment. Meanwhile, there\u2019s a lot of talk globally as well about combining fraud management and anti-money laundering efforts for combating financial crime in a unified, holistic fashion. In fact, this is one of the central point in BSP\u2019s circular 1140. How doable is this?<\/p>\n

Varghese \u2013<\/strong>\u00a0Historically, fraud and money laundering have always been treated as 2 separate problems. Given the rise in digital payments and the simultaneous rise in real-time fraud, banks can no longer afford to keep it that way. Which is why there\u2019s this new concept called FRAML or Fraud + Money Laundering. The drive to combine forces is also triggered by the real world of financial crime, because criminals operate across these two areas.<\/p>\n

When they commit fraud, they need to launder the proceeds of it, and both crimes are often committed within the same banking system.<\/p>\n

So, what FRAML does is converge the separate worlds of the bank\u2019s fraud and the financial crime compliance teams. While the primary goal for the fraud department is to reduce loss, for the compliance team it\u2019s staying on the right side of the regulators, but they have common goals including:<\/p>\n