Industry losing millions, but lack of investment shows apathy

Wednesday 3 December 2003 07:57 CET | News

Concern amongst UK financial institutions regarding financial crime is growing to unprecedented levels, but institutions have little or no dedicated budget to fight it, according to research by LogicaCMG.

The study reveals that only 17 per cent of financial services institutions have a dedicated budget to combat financial crime, despite two thirds (63 percent) of respondents claiming that financial crime is higher on the corporate agenda than ever before. The report reveals widespread disparity between what firms feel should be done to contest financial crime and the investment that is actually being made. More than three quarters (79 percent) of financial institutions believe they are proactive in battling financial crime, yet only a quarter (26 per cent) plan to increase budgets to tackle this growing problem. The lack of budgets to fight crime, combined with a lack of analysis is leading to a misdirection of resources with financial institutions failing to invest in crucial crime areas. The survey reveals firms are focusing on combating money laundering (45 per cent see it as the key focus) rather than credit card (3 per cent) and other types of fraud (27 per cent). This is worrying news for investors as money laundering does not impact on the bottom line unlike card fraud which cost £420 million alone in the UK this year and insurance fraud which amounted to £1 billion of fraudulent claims this year. The lack of investment by financial institutions can be explained in part by their perception that customers are either not interested in crime prevention activities (36 per cent) or do not care about it because they know that institutions will bear the cost (31 per cent). This leaves the fear of not meeting regulations as the only driver for the finance industry to tackle crime.

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Categories: Payments & Commerce | Payments General
Countries: World
This article is part of category

Payments & Commerce