It’s an exciting time to be a financial criminal. Armed with a growing array of cheap, yet powerful, tools with which to ply their trade, these lawbreakers are more dangerous than ever.
They’re creating deepfakes and synthetic identities to defraud financial institutions and customers. They’re using crypto currencies to launder money. They’re probing for weaknesses in innovative new systems, like instant payment platforms. These schemes are evolving with astonishing speed, aided by the rapid advance of technologies.
Financial regulation is evolving, too. For example, the U.S. Financial Crimes Enforcement Network (FinCEN) is updating AML (Anti-Money Laundering) and CFT (Countering the Financing of Terrorism) program rules to require deep, evidence-based controls.
As a result, financial crime compliance is undergoing rapid transformation, shifting from reactive, manual processes to integrated strategies that enable real-time detection, reduce operational burden and improve risk management.
Let’s consider three of the key strategies credit unions can implement.
- Consolidation. Institutions are consolidating compliance data and workflows into central “one-stop-shop” platforms. There are many advantages to this approach, which gathers AML, fraud, sanctions, and KYC data within a single case management environment. Consolidation provides an organization-wide view of governance, risk and compliance activities, enabling leaders to quickly assess exposures. A centralized platform also makes it easier to automate manual compliance tasks and standardize policies and procedures, while adapting to new regulatory requirements. These are complex undertakings, so before beginning it’s important to prepare properly by defining clear business goals – that is, know what success looks like. Financial institutions also must document and review current processes and workflows to understand integration and change management needs. And they must assess all applicable data to ensure it is accurate and accessible for migration into the new system.
- Shared technology and data-aggregation. Many credit unions have limited resources compared to larger banks, hampering their ability to maintain sophisticated fraud and AML teams. These institutions can get help from CUSOs, which are for-profit legal entities owned wholly or partially by one or more federally insured credit unions that primarily provides products or services to credit unions or their members. CUSOs pool resources and infrastructure to help credit unions improve detection capabilities and reduce costs. As with in-house consolidations, working with a CUSO requires preparation. Credit unions must establish clear governance, aligning risk tolerances and regulatory requirements and must also perform due diligence as they would with any outside vendor.
- Security. Security. Security. The Federal Financial Institutions Examination Council’s Cybersecurity Assessment Tool (CAT) has sunset as of Aug. 31, 2025. Credit unions can now access the new Automated Cybersecurity Evaluation Toolbox (ACET). The ACET aligns with evolving frameworks such as the NIST Cybersecurity Framework 2.0 and the Cybersecurity and Infrastructure Security Agency’s (CISA) Cybersecurity Performance Goals, which represent the new best practices in cybersecurity oversight.
Financial crime compliance is one of the most important responsibilities of every credit union. And constant vigilance is a must. One way that a credit union can ease the burden is by partnering with a business process outsourcer.
Outsourcing helps in two key ways: It taps into a pool of deep expertise that would be difficult for a credit union to maintain on its own, and it can yield substantial cost savings, freeing up credit union resources that can be invested, instead, in a stellar member experience.
“Outsourcing” can be a bit of a misnomer as it really entails a collaborative partnership, not a complete divesting of the processes – and responsibilities – of fraud prevention, regulatory compliance and the like.
A partnership with a specialized vendor allows the brunt of the work for preventing, detecting and mitigating risks to be managed and supported by a team focused solely on those tasks as a core competency.
While there are many aspects of what makes the right partner, three elements stand out to me:
- Does the partner possess the best financial crimes and compliance talent? And is its talent bench deep?
- How does it deploy AI and other advanced technology in its work? Does it have a viable hybrid AI/Human expert model? One without the other is insufficient.
- Can it ensure the security of your data and your members’ privacy?
Whether a credit union works with an outsourcing partner or not, financial crime compliance should be a priority because every institution faces growing risks from money laundering, fraud and terrorist financing as they handle significant fund flows and serve vulnerable communities. Effective compliance programs protect credit unions from hefty penalties as well as reputational damage, while ensuring member safety.
It’s about trust, which is critical to the credit union’s mission.
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