Financial crime compliance cost for FIs to reach USD 213.9 bln, LexisNexis Risk Solutions finds

Thursday 10 June 2021 08:37 CET | News

The projected total cost of financial crime compliance across all financial institutions reached USD 213.9 billion in 2021, according to LexisNexis Risk Solutions study.

This value has surpassed the USD 180.9 billion recorded in 2020, with the majority of this sizeable year-over-year increase represented by Western Europe and the US. The True Cost of Financial Crime Compliance Global Report from LexisNexis Risk Solutions has surveyed 1,015 financial crime compliance decision makers at financial institutions including banks as well as investment, asset management and insurance firms globally.

Key findings from the report include:

  • Western countries continue to spend highest on compliance – Western European countries and the US continue to represent 82.7% of global total projected costs. Germany and the US bear the bulk of cost increases at USD 9.6 billion and USD 8.8 billion respectively with Germany outsizing all other countries by a considerable amount.

  • Majority of operational challenges ranked as important – Customer risk profiling, sanctions screening, regulatory reporting, identifying politically exposed persons (PEPs), KYC for account onboarding and efficient alerts resolution are all similarly ranked as key challenges.

  • Pandemic impact – The ongoing pandemic has left a significant imprint on compliance departments, which exacerbated existing issues and led to an increase in the time and spending needed for due diligence. Mid and large firms in the US and Canada and parts of LATAM experienced sizeable pandemic-related cost increases. Key operational challenges became heightened in these markets since the start of the pandemic, including increased alert volumes and suspicious transactions, inefficiencies with alert resolution and due diligence, more manual work, and limitations with proper risk profiling/sanctions screening/PEP identification.

  • Technology investment leads to better outcomes – Financial institutions implementing technology solutions to support financial crime compliance efforts have been more prepared and less impacted overall by increasing regulatory pressures and COVID-19.

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Keywords: compliance, financial crime, KYC, AML, report, risk management, LexisNexis
Categories: Fraud & Financial Crime
Countries: World
This article is part of category

Fraud & Financial Crime