Bank Reputation Risk Management, Derisking & Fighting Financial Crime
Guidance on balancing reputational and financial crime risks. Will produce a paper on how banks can manage non-financial risks, especially reputational and AML-related, without excluding legitimate clients. Delivery expected September 2025.
About
As famously stated by Warren Buffett, "It takes 20 years to build a reputation and five minutes to ruin it." This sentiment rings particularly true in the banking sector, where reputation forms the foundation of stakeholder trust—be it customers, shareholders, regulators, or the public at large.
Banks are especially vulnerable to reputational damage, often triggered by associations with financial crime, regulatory breaches, or operational failures. The financial, legal, and brand-related fallout from reputational harm can be severe and enduring—far outweighing the original incident’s direct costs.
At the same time, the increasing focus on managing non-financial risks, particularly those related to financial crime (e.g. money laundering, terrorist financing, sanctions breaches), has led to aggressive risk mitigation strategies by banks. These include derisking, debanking, or the termination of entire customer relationships or sectors. While such actions may be taken to preserve institutional integrity, they often result in significant unintended consequences—including financial exclusion, loss of access to basic services, and heightened vulnerability for legitimate individuals and organizations.
The challenge, therefore, lies in striking the right balance: ensuring that banks appropriately manage financial crime risks and reputational concerns without resorting to overcorrections that undermine trust, fairness, or inclusive finance.
Key Deliverable:
The GCFFC will produce a comprehensive guidance paper that explores the intersection of reputational risk and financial crime compliance. This document will outline:
Principles for assessing and responding to reputational threats in a proportionate, risk-based manner
Considerations for avoiding unintended negative impacts such as unjustified derisking
Strategies to build resilience and public confidence without compromising compliance obligations
Practical case studies or illustrative frameworks for decision-making
The guidance will be developed in consultation with GCFFC experts and stakeholders across banking, regulation, civil society, and academia. It is scheduled for publication by September 2025, in time for the GCFFC Annual Conference.