Financial crime’s new home start - Comment & Profiles -
Brian Caplen blog 2016

Among a list of challenges for banks is how to maintain strict standards of compliance for traders working from home.

In many banks, there is a stipulation that traders must take a specified amount of holiday. The rationale is that frauds often come to light when the perpetrators are out of the office and unable to maintain covering behaviours. But how does this safeguard function when staff are working from home?

This is just one of the many compliance and anti-fraud challenges thrown up by the move to home working. With banks having spent considerable effort and time strengthening culture since it took a drubbing in the last financial crisis, they now have the task of maintaining it with the workforce scattered. A key aid to enforcing the rules in any institution is peer pressure and the requirement to act within the norms of accepted behaviour.

But if peers are not around how much more likely is it that individuals – in thinking things out entirely by themselves – will arrive at the wrong conclusion? Are traders tempted to make riskier bets when advice is less readily available, the market is volatile and there is a need to act fast?

Other concerns revolve around the enforcement of the 'no personal calls' rule when the trading floor has become the home office, increased opportunities for insider trading and the security of home wi-fi that could be breached by outsiders.

The conclusion has to be that the next financial scandal when it unfolds will have a home working element in it somewhere.

The conclusion has to be that the next financial scandal when it unfolds will have a home working element in it somewhere. Data analytics and AI programmes that are already used to track unusual activity in the office can of course be adapted to the current situation but banks must implement this carefully. An over zealous approach invites the response from employees that they are being spied on when trying to do their best under difficult circumstances.

Regulators, for their part, have indicated that they are giving no slack in maintaining high standards during this very tough operating period. They are right to take this stance and banks can expect no sympathy if they fail to get things right. They need to be working out how to solve these problems now and not waiting for the regulatory backlash after something goes wrong.

Brian Caplen is the editor of The Banker. Follow him on Twitter @BrianCaplen

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