Global Survey of Financial Crime Compliance Professionals
Points to United Kingdom,
Germany and United States as Highest Spenders
ATLANTA, April 7, 2020 /PRNewswire/ -- Today,
LexisNexis® Risk Solutions released its True Cost of
Financial Crime Compliance Global Report, which provides global
industry-driven insights for financial services firms across the
Asia Pacific (APAC) region,
Europe, the Middle East and Africa (EMEA), Latin
America (LATAM) (including Mexico) and the U.S. and Canada. The report reveals that the projected
total cost of financial crime compliance in these markets amounts
to $180.9 billion.
The survey of 898 decision-makers who oversee financial crime
compliance and compliance operations at their companies solicited
responses on processes such as sanctions monitoring, know your
customer (KYC) remediation, anti-money laundering (AML) and
transaction monitoring, among others.
Key findings from the LexisNexis Risk Solutions True Cost
of Financial Crime Compliance Global Report:
- Europe and U.S. Hit Hardest
by Costs – The largest regional markets for financial crime
compliance are Europe and
United States. Significantly more
financial institutions in these markets ⸺ more than 6,000 in
the United States alone ⸺ drive
higher total spend on financial crime compliance, compared to other
regions. Average annual financial crime compliance costs are
highest for mid/large sized financial institutions (more than
$10 billion in total assets) in the
United Kingdom, Germany, France, Italy
and the Netherlands.
- Labor is Single Largest Driver of High Compliance Costs
– Although there are a number of factors that contribute to higher
financial crime compliance costs, including increasingly complex
regulations, data privacy limitations, sanctions violations and the
level of skilled labor, the global average distribution of
compliance costs are 57% labor, 40% technology and 3% other, with
EMEA leading labor cost spend at 62%. In APAC, labor represents a
significant component of financial crime compliance costs,
averaging 54% of costs for those surveyed and scaling upwards for
larger firms. Labor costs rose an average of 9% – 10% during the
past 24 months across APAC.
- Due Diligence Efforts Take Longer and Increase Costs –
Complying with increasingly complex regulations causes financial
firms in Europe to take longer
than any other market to complete business account due diligence
which increases the cost of financial crime compliance overall. For
example, the average time required to onboard a mid-sized
corporation has increased from 21 hours in 2017 to 36 hours in
2019.
- Financial Institutions Identify Non-Bank Payment Providers
as a Source of Risk – According to financial institution
professionals surveyed, non-bank payment providers create
additional compliance challenges and risk for financial firms,
particularly in LATAM and Canada.
Across all regions, however, the negative impact is broad,
including increased alert volumes, more correspondent banking risk,
greater compliance team stress, and higher technology and labor
costs.
- Financial Crime Compliance Challenges Negatively Impact
Productivity and Employee Retention – Financial crime
compliance challenges and issues have a negative impact on
productivity at financial institutions, particularly in EMEA and
LATAM. Across all regions, costs rose 7% annually during the past
two years, with financial crime compliance processes and burdens
negatively affecting productivity and new customer acquisition
efforts. Additionally, compliance teams are stressed to a degree
where managers worry about retaining skilled professionals ⸺ 67% of
compliance decision-makers are concerned with job satisfaction
within their workforce.
Daniel Wager, vice president,
global financial crime compliance strategy for LexisNexis Risk
Solutions, said, "As criminals become more sophisticated, a
multi-layered solution approach to financial crime compliance is
crucial to facilitating a more cost-effective, efficient compliance
approach, as well as one that provides benefit to the larger
organization. Financial institutions should investigate both the
physical and digital identity attributes of their customers,
leveraging data analytics to assess risks and behaviors in real
time."
Wager continued, "There is now an increased recognition among
financial institutions that financial crime compliance initiatives
provide broader benefits. Utilizing the right technologies as
compliance workforces grow allows organizations to decrease the
cost of compliance per full-time equivalent (the labor component)
and mitigate costs associated with lost business due to increased
friction at onboarding. Keeping FTE costs lower is essential
to profitability, since labor tends to account for significant
increased compliance expenses year-over-year."
Download the True Cost of Financial Crime Compliance Global
Report.
About LexisNexis Risk Solutions
LexisNexis®
Risk Solutions harnesses the power of data and advanced analytics
to provide insights that help businesses and governmental entities
reduce risk and improve decisions to benefit people around the
globe. We provide data and technology solutions for a wide range of
industries including insurance, financial services, healthcare and
government. Headquartered in metro Atlanta, Georgia, we have offices throughout
the world and are part of RELX (LSE: REL/NYSE: RELX), a global
provider of information-based analytics and decision tools for
professional and business customers across industries. For more
information, please visit https://risk.lexisnexis.com/ and
www.relx.com.
Media Contacts:
Marcy
Theobald
LexisNexis® Risk Solutions
678.694.6681
marcy.theobald@lexisnexisrisk.com
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