Businesses burdened by financial crime regulations, report says

SmartSearch is a UK-based provider of digital compliance and anti-money laundering (AML) solutions, which has released data indicating that nearly three-quarters (72%) of regulated firms feel overwhelmed by ongoing compliance obligations related to financial crime prevention. 

The official press release indicates that financial crime costs the UK an estimated GBP 100 billion annually and is linked to serious offenses such as human trafficking, money laundering, and drug trade. In response, regulators continue to tighten oversight, requiring businesses to implement more rigorous compliance measures.

Businesses struggle with compliance 

According to SmartSearch’s study, The Compliance Forecast, while stringent regulations are essential in addressing increasingly sophisticated criminal activities, many businesses are finding it difficult to adapt to the growing complexity. Companies surveyed reported challenges in maintaining compliance, partly due to a reluctance to adopt digital compliance solutions. 

The findings, based on responses from over 600 senior decision-makers in finance, property, legal, and accounting sectors, highlight several key issues:

• Regulatory burden: 72% of businesses report feeling overwhelmed by compliance demands, with financial services and accountancy firms particularly affected (75%). 
• Declining confidence: nearly 73% of respondents express uncertainty about their ability to remain compliant, and 30% anticipate greater compliance pressures in the coming year. 
• Barriers to growth: more than three-quarters (76%) of businesses feel that regulatory complexities are limiting expansion, and 13% believe compliance requirements have strained customer relationships. 
• Escalating complexity: nearly nine in ten (89%) firms find current regulations increasingly difficult to navigate, with 68% expecting compliance challenges to intensify. 
• Rising costs: compliance expenses have significantly increased, with 74% of businesses citing financial strain over the past three years. Almost one-third now view compliance costs as an obstacle to profitability. 

Around 31% of respondents identified financial crime as a factor damaging the UK’s economic growth. While regulations play a crucial role in mitigating risks, the report suggests that reassessing current frameworks may be necessary to balance security with economic expansion. 

The report suggests that businesses can improve compliance management by adopting digital tools, creating strategies for industry-specific risks, and working collaboratively with regulators and technology providers. Taking a proactive approach, the study concludes, may enable companies to turn compliance from a challenge into a strategic advantage.