We commissioned the Scale and Impact Project in late-2007 to explore the development of concepts and methodologies that could be used to understand and measure the scale, incidence and impact of different types of financial crime.
The aim of the project was to inform our financial crime risk assessment methodology, looking at how the measurement of impact on individuals, financial institutions and wider society could be used to improve risk-based and proportionate financial crime resource allocation. Our underlying intention was to analyse how regulatory activities could be measured in relation to performance against the financial crime statutory objective.
The project has made a positive contribution to financial crime research. It has highlighted the methodological and empirical difficulties associated with the measurement of financial crime and opened up a number of interesting questions for debate. It has also emphasised the need for all organisations with a role to play in preventing and reducing financial crime to work together to address issues such as those raised in the Scale and Impact project.
In accordance with the preparatory role of the commissioned papers, recommendations have been made to progress the development of concepts and methodologies to measure the impact and effectiveness of financial crime work in the future. According to Howell & co ‘at least some of the methodologies required to compare the impacts and amenability to control of different financial crime types are known in principle. The knowledge gap can and should be addressed in a planned and progressive manner, by the FSA, the National Fraud Authority, SOCA and/or other public and private sector partners in the UK and, potentially, internationally.’
We are hosting a special plenary session on ‘Measuring the scale and impact of financial crime: assessing risk and allocating resource’ at the Cambridge International Symposium on Economic Crime, at Jesus College, Cambridge, on 3 September 2009. This session will present the findings from two commissioned papers (links to which are provided below) and aims to encourage further debate on the measurement of financial crime within the academic and professional communities
Scale and Impact of Financial Crime Project: Critical Analysis [PDF]
Matthew H. Fleming, PhD
August 2009
This document, a critical analysis of the literature on measuring financial crime, represents one of the two outputs of the project. It explores: 1) the methods and concepts currently used in the literature to measure the scale and impact of financial crime; and 2) the likely fitness for purpose of these methods/concepts for the FSA’s risk assessment needs.
Impacts of Financial Crimes and Amenability to Control by the FSA: proposed framework for generating data in a comparative manner [PDF]
John Howell & Co. Ltd
August 2009
This paper suggests that rather than spending undue resource in trying to measure the scale of all financial crimes, it is desirable ‘to estimate the impacts of laundering and other criminality upon FSA-regulated markets, entities and customers; and also to estimate the amenability of these different forms of financial crime to control (that is to say, how much influence a variety of actions by the regulator might have on those impacts).' Focusing on fraud, money laundering and market abuse, the authors present a framework of six questions, data from which could inform the FSA decision making process for prioritising supervisory and enforcement action and the allocation of financial crime resource.
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