Compliance Risk Is Now Operational Risk: Managing Deepfakes & Emerging Threats

Compliance Risk Is Now Operational Risk: Managing Deepfakes & Emerging Threats

The U.S. Financial Crimes Enforcement Network (FinCEN) recently issued a bulletin urging financial institutions to get better at managing deepfakes—AI-generated fraudulent images—used to bypass customer due diligence (CDD) programs. While the bulletin focuses on generative AI, an article from Navex suggests the broader message highlights a critical trend: traditional compliance risks are increasingly becoming operational risks, posing immediate threats to business operations, finances, and reputation.

Compliance Risks: A Strategic Imperative

According to the article, compliance risks were historically regulatory concerns, often relegated to a lower priority. Today, ignoring these risks can result in significant operational disruptions, financial losses, and reputational damage far beyond regulatory penalties. Compliance officers must recognize this shift and communicate how robust compliance programs can enhance overall risk management, positioning compliance as a strategic advantage.

Deepfakes as a Case Study

FinCEN’s bulletin outlines how fraudsters use AI to fabricate identification documents, such as driver’s licenses and passports. To combat this, firms should implement measures like:

• Reverse image searches to verify image authenticity.
• Metadata analysis and AI tools designed to detect manipulated images.

These actions aren’t just regulatory requirements under the Bank Secrecy Act but essential safeguards against operational threats like fraud and financial loss.

Bridging Compliance and Operational Risk

Compliance officers should emphasize their role in managing enterprise-wide risks. Key capabilities include:

• Risk mapping to identify overlapping compliance and operational risks.
• Enhanced due diligence for supply chain transparency and business continuity.
• Effective internal reporting to address emerging threats quickly.
• Collaboration with internal audit to design controls that mitigate converging risks.

By reframing compliance as integral to operational risk management, compliance leaders can secure greater support, resources, and influence within their organizations, ensuring resilience in a rapidly evolving risk landscape.