Financial crimes such as money laundering , fraud and terrorist financing continue to pose significant risks to the stability and integrity of the global financial system . Governments and regulatory bodies have responded by implementing strict measures to detect , prevent and report such activities . However , as countries pursue the protection of their citizens ’ data and assert country sovereignty , conflicts between antifinancial crimes ( AFC ) compliance and data sovereignty have emerged .
AFC compliance involves a comprehensive framework of laws , regulations and procedures designed to ensure the integrity of financial systems . This includes know your customer ( KYC ) procedures , anti-money laundering ( AML ) measures and the reporting of suspicious activities . Compliance obligations at a high level are similar ( think about the pillars ), but obligations do differ across jurisdictions , creating challenges for financial institutions ( FIs ) operating in multiple countries .
Data sovereignty refers to the concept that data is subject to the laws and regulations of the country in which it originated . It is driven by concerns over privacy , security and national interests . Countries are enacting legislation to assert control over data generated within their borders . These range from requiring organizations to store and process data locally to requiring organizations to satisfy stringent conditions before data can be transferred offshore . This approach can and often does conflict with cross-border financial transactions and compliance efforts to prevent money laundering .
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