AFC CHALLENGES
The conflicts and challenges
The conflicts between financial crimes compliance and data sovereignty have a significant impact on global FIs . These organizations face an increasing burden in navigating complex and conflicting compliance requirements , investing in localized infrastructure and managing legal risks associated with data access and storage .
• Data localization requirements : Some countries impose data localization requirements , mandating that data generated within their borders be stored locally . This conflicts with the cross-border nature of financial transactions and the need for centralized compliance efforts , making it challenging for global FIs to comply with both data sovereignty and AFC obligations . In certain instances , an organization may end up duplicating roles and systems to meet individual jurisdictional requirements , creating additional expense and risk .
• Data access and jurisdictional issues : Data sovereignty can also create challenges in accessing data for compliance purposes . Governments may limit access to data stored within their jurisdiction , hindering the ability to detect and investigate financial crimes effectively . As an example , an AML or sanctions reporting obligation in one country may conflict with another country ’ s data sovereignty laws , putting FIs in difficult positions .
The need for collaboration and harmonization
Collaboration and harmonization between governments , regulatory bodies and FIs can address the complexity and conflicts of financial crime . These include :
• International cooperation : Encouraging dialogue and cooperation among governments and regulatory bodies to develop common frameworks and standards for AFC compliance , taking into account data sovereignty concerns .
• Public-private partnerships ( PPPs ): Governments and regulatory bodies must actively engage with the private sector , fostering partnerships that promote information sharing and collaborative efforts in combating financial crimes while respecting data privacy . By working together , public and private entities can leverage their respective strengths , expertise and resources to develop innovative solutions that address compliance challenges while respecting data sovereignty .
By working together , public and private entities can leverage their respective strengths , expertise and resources to develop innovative solutions that address compliance challenges while respecting data sovereignty
18 acamstoday . org