impacts of financial crime upon the regulated financial service sector in Australia

What are the impacts of financial crime upon the regulated financial service sector in Australia

QUESTION
What are the impacts of financial crime upon the regulated financial service sector in Australia?

ESSAY TITLE
Assessing the risks: the impacts of financial crime upon the reregulated financial service sector in Australia.

ESSAY STRUCTURE

# INTRODUCTION

– The financial crime discussion and viewpoint.
o Finical crime in context / assessing the risks and impacts / aligning regulation and risk

# FINACIAL CRIME IN CONTEXT 2400 Words

o What is financial crime?
o Concepts of financial crime in the service sector
o Threats (Internal Vs. External)
o Who & why is committing it?

# ASSESSING THE RISKS AND IMPACTS 2400 Words
o The impacts and consequences
o The challenges
o The risk control system, challenges and solutions

# ALIGNING REGULAION AND RISK 2400 Words
o Regulation and Law Enforcement
o Command and Control
o Existing and potential fraud controls
# CONCLUSION 1000 Words
# BIBLIOGRAPHY
Assessing the risks: the impacts of financial crime upon the reregulated financial service sector in Australia.

The aim of this essay is to identify how financial crime is impacting upon the regulated financial service sector in Australia.

It will begin with a comprehensive analysis on identifying the context of financial crime. By breaking down its concepts within the financial service sector and
examining on what threats financial crime is imposing upon the financial institutions to identify exactly whom, how and why it is being committed.

This will follow on with a critical evaluation into assessing the potential risks and impacts that financial crime asserts on the financial sector. It will help to
identify on some of the challenges that the regulators and law enforcement bodies face in-order to protect the financial sector and ensure regulated compliance.

Next will proceed into the regulatory defense against financial crime and examine on its statutory framework and effectiveness, as well as its integration and impacts
that it serves in order to ensure compliance, mitigate risk and maintain integrity. This will lead into identifying some of the existing fraud controls that are in
place and potentially, any new ones.

In closing, a summary will conclude the findings and an evaluation upon the impacts of financial crime should be revealed.

FINANCIAL CRIME IN CONTEXT

So what exactly is financial crime? Ryder (2011, p. 55) believes “there are no direct legal definitions of what exactly financial crime is”. A Leading professor on the
topic, Mr. Peter Gottschalk (2014) uses a collective of terms such as “financial crime,” “fraud,” and “white-collar crime” interchangeably and we may assume that they
all embark towards a similar trait.
It is however important, to firstly gain some perspective in terms of reference, given the broadness of what financial crime really portrays and it’s links to the
Australian financial service sector.

By default, Gray & Hamilton (2006) suggest that financial crime is essentially a means to describing a collective of deceitful criminal acts for financial gain.
However, Picket & Picket (2002, pp. 182) better suggests that it is “the use of deception for illegal gain, normally involving a breach of trust and some concealment
of the true nature of the activities”.

With this working definition we can now begin to evaluate that financial crime is essentially profit driven, and portrays the use of deception, concealment and breach
of trust. As Morgan (2005, p. 22) argues that profit driven crimes can be simply categorized according to the type of theft, fraud, manipulation, or corruption like
offending.

Now we begin to identify into some of the sub categories of financial crime and how they cover a whole array of activities that fall under that general banner of
financial crime.

<IN PROGESS – TO CONTINUE>
– Concepts of financial crime in the service sector
– Threats (Internal Vs. External)
– Who & why is committing it?

ASSESSING THE RISKS AND IMPACTS

By its very definition, impact is the direct effect, influence or consequence on something.
From this assertion, lets look at Edelbacher, Kratcoski, & Thiel (2012 p. 66) who believe that “…financial service sectors of any nation will feel the direct impacts
of what financial crime represents…” And (Hilton, 1982, p. 133) suggests, “The impacts of financial crime are enough to cripple a nation…”

In its submission to the Australian Crime Commission enquiry into financial crime (2015, p. 4) the Australian Federal Police cited its direct impacts as
“…a significant and growing threat to Australia’s national security as it subverts, exploits and distorts legitimate markets and economic activity. This crime type
also undermines the ongoing stability of Australian institutions and Governments by having a corrosive impact on community confidence.”
Australia’s financial service sector

<IN PROGESS – TO CONTINUE>
– The impacts and consequences
– The challenges
– The risk control system, challenges and solutions
ALIGNING REGULATION AND RISK

The Australian financial service sector is regulated and supervised by a large number of federal and state government agencies with overlapping jurisdictions (OECD,
2010).
Overall regulation of the banking and finance system is divided between three independent entities, namely the Australian Prudential Regulation Authority (APRA) the
Reserve Bank of Australia (‘the RBA’), and the Australian Securities and Investments Commission (‘ASIC’) (OECD, 2010).
APRA was established by the Australian Prudential Regulation Authority Act 1998 (Cth). Its supervisory powers come primarily from a range of legislation, principally,
from the Banking Act, the Superannuation Industry Act 1993 (Cth) and the Life Insurance Act 1995 (Cth) (McNeil & O’Brien, 2010).
In performing its functions and powers, APRA is required to balance the objectives of competition, financial safety and efficiency, contestability and competitive
neutrality and, in balancing these objectives, to promote financial system stability in Australia (McNeil & O’Brien, 2010, p. 334).
Established by the Reserve Bank Act 1959 (Cth) the RBA is Australia’s central bank and has had a long-standing responsibility for the overall stability of the
financial system and for monetary policy (OECD, 2010).
<IN PROGESS – TO CONTINUE>
Regulation and Law Enforcement
Command and Control
Existing and potential fraud controls

CONCLUSION

The impacts of financial crime upon Australia’s financial service sector should not be underestimated. As we have discussed, financial crime itself – an inter-play of
terms (white-collar and fraud) hold considerable threat to the integrity and security of legitimate businesses and institutions, and to the safety and prosperity of
private citizens and communities of Australia.

<IN PROGESS – TO CONTINUE>

BIBLIOGRAPHY
Australian Crime Commission, (n.d.), (2015), “Financial Crimes” [Publication] Retrieved from www.crimecommission.gov.au/organised-crime/crime-types/financial- crimes,
(accessed 22nd March 2015).

Australian Crime Commission, (n.d.), (2015), “Enquiry into Financial related crime” [Publication] Retrieved from: http://www.aph.gov.au/Parliamentary
_Business/Committees/Joint/Law_Enforcement/Financial_related_crime/Report/c04

Beck, U., (1992) “Risk Society: Towards a New Modernity‬” SAGE Publications: California.

Edelbacher, M., C, Kratcoski, P., & Theil, M., (2012) “Financial Crimes: A Threat to Global Security” CRC Press: London UK. ‬ ‬

Gottschalk, P., (2010) “White-Collar Crime: Detection, Prevention and Strategy in Business Enterprises.” Universal-Publishers: Boca Raton, Florida USA.

Gray, J., & Hamilton, J., (2006) “Implementing Financial Regulation: Theory and Practice.” John Wiley and Sons: New York.

Morgan, R., (2005) “The snakes in suits: White-collar criminal” John Wiley and Sons: New York.

McNeil, I., & O’Brien, J., (2010), “The Future of Financial Regulation” Heart Publishing’s: Portland Oregon.

Picket, J., & Picket, H., (2002) “Financial Crime Investigation and Control.” John Wiley and Sons: New York.

Pearson, G., (2009) “Financial Services Law and Compliance in Australia.” Cambridge University Press: Melbourne. P.4

Organization for Economic Cooperation and Development (OECD), “Reviews of Regulatory Reform” (n.d.) 2010, Corrigenda Publications: Sydney

Ryder, N., (2011) “Financial Crime in the 21st Century: Law and Policy” Edward Elgar Publishing: England UK

Hilton, G., (1982) “The criminal culture, law and policy in England” Cambridge University Press: UK.
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