As published in Retail Banker International.
Steve Marshall, Director of Advisory Services, FinScan, an Innovative Systems solution, is one of 260+ industry leaders providing their expert opinions on prospects for the banking and payments sectors in 2025:
“With geopolitical tensions continuing to escalate, financial crime measures will be front of mind for governments, regulators and businesses in 2025.
We expect to see an increased focus on compliance and implementation of new regulations, such as those introduced by the EU AML package in 2024. The new EU Anti-Money Laundering Authority, will also start work in mid-2025.
With the growing adoption of digital currencies, regulators will implement stricter AML and KYC requirements for entities providing service and access to digital assets and cryptocurrencies. This includes enhanced scrutiny of digital asset exchanges and the application of traditional compliance measures to the crypto space.
There will also be increased international cooperation between countries to harmonise AML regulations, close regulatory gaps, and enhance information-sharing agreements. G7’s first-ever joint guidance on preventing evasion of export controls and sanctions imposed on Russia issued is an example of this approach.
Technological advancements will also drive change. Digital adoption and investment in AI, machine learning, and blockchain solutions will accelerate as financial institutions look to enhance customer due diligence (CDD) and transaction monitoring.
These advancements are leading to changing best practices. There is a shift towards more dynamic and ongoing CDD processes, which aim to identify and mitigate risks as they arise rather than rely solely on periodic reviews.
Compliance programmes will increasingly incorporate ESG considerations, assessing clients’ environmental, social and governance impact as part of the due diligence process, reflecting a broader trend towards responsible banking and investment. Checking for governance transgressions is a natural focal point. However, penalties can also be levied for environmental and social reasons.
Underpinning these developments will be a greater focus on data quality. Poor data quality can lead to ineffective risk detection, high false positive rates and operational inefficiencies. These challenges can be addressed by using compliance-specific data quality solutions integrated into the screening process.”