- Financial crime is a complex and ever-evolving issue.
- 49% of global organisations victim of fraud or economic crime.
- Regulators, law enforcement and industry working together.
We are living in a period of unparalleled technological, geopolitical and socio-economic change. For the financial services industry, this environment creates a tremendous opportunity to provide faster, safer and more affordable services to larger and more diverse populations – but it also creates risks of financial crimes that are increasingly sophisticated and global in nature. The speed and complexity of these opportunities and risks, paired with the scope and scale of the environmental and social challenges facing the world today, requires thoughtful and collaborative approaches. The ability and willingness to partner across a broad spectrum of stakeholders is emerging as a critical competency and competitive enabler.
Partnership starts with finding commonality of purpose – it’s about focusing on what connects us instead of what separates us. This is an approach – and a skill – of growing importance in our increasingly fractured and polarized world. It’s not just about identifying mutual risks, but also agreeing to take action in ways that can unlock mutual and public benefit. The commercial case for strategic partnership has become more widely adopted over the past several years, particularly in the financial services and technology sectors. At PayPal, we’ve undertaken a significant shift – moving from a go-it-alone model, to a collaborative approach by establishing more than 40 partnerships with banks, card networks, fintech innovators and leading technology companies that puts customers at the center and, ultimately, drives shared value.
What is the World Economic Forum doing about improving online safety?
With almost 3.8 billion people now online globally, the digital world offers significant benefits, but also poses the risks of harmful content.
The Global Alliance for Responsible Media (GARM), created by the World Federation of Advertisers, is scaling its impact by partnering with the World Economic Forum's platform for Media, Entertainment and Culture to improve the safety of digital environments, addressing harmful and misleading media while protecting consumers and brands.
GARM focuses on ensuring viewer safety for consumers, reducing risks for advertisers, developing credibility for digital platforms and, more broadly, ensuring a sustainable online ecosystem.
The Alliance is working with the Forum’s network of industry, academic, civil society and public-sector partners to amplify its work on digital safety and to ensure that consumers and their data are protected online within a healthier media ecosystem.
Businesses can join the Forum’s Platform for Shaping the Future of Media, Entertainment and Culture and apply to partner with the Alliance and similar initiatives. Read more in our Impact Story or contact us to find out more.
The partnership approach has equal or greater applicability beyond the commercial perspective to address some of the biggest challenges facing the world today, including financial crime and related issues, which range from money laundering to terrorist financing to human trafficking.
Financial crime is a complex, multi-faceted and ever-evolving global issue. Every year, $US1-2 trillion dollars (representing about 2-5% of global GDP) is involved in illegal money laundering. Financial crime is a problem that goes well beyond the financial services community. A recent PWC survey of more than seven thousand respondents from a wide variety of industries found that 49% said they had been a victim of a financial crime in the past year. Financial crime, which increasingly uses cyber tools and techniques, also extends into funding bad actors, including terrorists and enables illicit activities such as human trafficking.
Partnership among and between regulators, law enforcement and private industry is critical to confronting the enormity and complexity of this issue. For example, close coordination between law enforcement and private industry, including appropriate sharing intelligence and insights, can uncover illicit activity and actors that neither party could fully identify on their own. This was a hard lesson that was highlighted by the 9/11 Commission and it continues to have broad application. Also, it is critical that regulators and law enforcement partner to ensure that regulatory frameworks enable, encourage and/or require appropriate intelligence sharing between the public and private sectors.
While there is a natural and purposeful tension between regulators and the private sector entities that they regulate, this does not preclude the potential for developing trusted partnerships and opportunities for collaboration. For example, ongoing and proactive cooperation can nurture a trust-based approach to introducing new and innovative products and technology.
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Concern over new products and technology is understandable. To address this concern, mutual investment in dialogue and education on how these new products and technologies work to benefit customers and society (e.g., digital currencies) would satisfy regulators’ and the private sector’s common goal of ensuring an appropriate regulatory framework that encourages innovation while mitigates risks of illicit use or unintended negative impacts. As engagement increases and trust builds, public and private sector entities can work together to think proactively about building flexible frameworks that will keep pace with technology that continues to change at an accelerating rate.
In addition, multilateral and inter-governmental entities have a meaningful leadership role to play. The influential work of the Financial Action Task Force (FATF) has helped to create a more consistent regulatory framework across the globe that allows partnerships between the private sector and law enforcement to thrive on a large scale. The work of the World Economic Forum's Coalition to Fight Financial Crime is also helping to further public-private cooperation on combatting financial crime. Groups and initiatives such as these are critical not only for knowledge and best practice sharing, but also for building engagement mechanisms to ensure effective standards going forward.
Nonprofits, with their passionate focus on the public interest, represent another important stakeholder group whose collaborative contributions can be critical to bringing together public and private players to engage on specific challenges and initiatives of shared importance. The effort to combat human trafficking, for example, is an area where a deep partnership model – one much broader than pure philanthropy – can have significant impact. Private sector companies, like PayPal, have the opportunity to work with leading nonprofit organizations, such as Polaris, on the front lines of this critical issue in communities around the world. Through these type of partnerships, actionable intelligence can be better identified and leveraged to interrupt human trafficker cash flows and enable prosecutions of financial crimes, including money laundering.
The ever-evolving work of combatting global financial and cyber crimes is, by its nature, never done and no sector can win the battle alone. To effectively meet this fundamental challenge of the digital era, we must work together in trusted partnership across the public, private and nonprofit sectors with common purpose and determination.