- Nearly All Financial Institutions Report Rising Financial
Crime Compliance Costs in Past 12 Months
- Cost Comparable to $3.33 Per
Month for Each Working-Age Person in the World
ATLANTA, Sept. 26,
2023 /PRNewswire/ -- LexisNexis® Risk Solutions
released its annual True Cost of Financial Crime Compliance Report.
The study examines how financial institutions navigate the expenses
and challenges tied to evolving financial crime compliance
requirements. The findings reflect the perspectives of 1,181
professionals in financial crime compliance from a diverse range of
small, medium and large companies across the U.S./Canada, APAC, EMEA and LATAM.
The report offers insight into the worldwide financial cost of
compliance, with financial institutions bearing a total cost of
U.S.$206.1 billion. This cost is
comparable to more than 12% of global research and development
(R&D) expenditure and equates to $3.33 per month for each working-age individual
on Earth.
Key findings from the LexisNexis Risk Solutions True Cost
of Financial Crime Compliance Report - 2023 include:
Artificial intelligence (AI) leaves its
mark
While certain industries are still determining
the ways in which AI and machine learning (ML) will bring about an
influence, 71% of professionals in financial crime compliance
indicate that their organizations are already enhancing data
utilization through advanced analytics. Additionally, 72% confirm
that they employ analytics and AI to enhance their compliance
procedures.
However, similar to historic changes in ways of working,
problems with data quality, data silos, outdated legacy systems and
a lack of collaboration internally can create avoidable compliance
activity and expenditure.
EMEA remains a high-cost center for financial crime
compliance
The study reveals that EMEA financial
institutions and their customers continue to incur a more
substantial expense for financial crime compliance compared to
other regions. The overall cost of financial crime compliance in
EMEA surpasses that of the U.S./Canada by 39.8%. This difference is partly
indicative of the escalating intricacy of compliance
requirements.
Globally, 78% of organizations and specifically 80% in EMEA
indicate that the intricate network of regulations and sanctions
acts as a constraint on their business operations. In contrast,
APAC and LATAM are comparatively more cost-effective regions,
despite significant compliance expenditure. The financial
compliance expenses in APAC amount to 74.5% of those in the
U.S./Canada, while LATAM's costs
are 24.7% in comparison.
Change to address future challenges
CEOs, vice
presidents and directors in financial institutions globally are not
complacent. Many new initiatives add to the ongoing complexity they
face in meeting financial crime compliance requirements. However,
85% of financial institutions place enhancing customer experience
at the top of their priority list. This reaffirms a commitment
towards fostering trust and delivering satisfaction, even in the
face of proliferating financial threats. A substantial emphasis of
these efforts revolves around optimizing the efficiency and
efficacy of financial crime compliance concerning payments.
Globally, 74% of institutions emphasize that this is a critical or
high-priority endeavor.
"The financial impact of crime resonates through businesses'
financial statements and consumers' wallets," said
Grayson Clarke, senior vice
president, LexisNexis Risk Solutions. "In the pursuit of the
common good, legislators and regulators collaborate tirelessly with
financial institutions to establish necessary mandates. However,
these endeavors aren't without costs. Our report underscores that
financial institutions are making significant investments to stay
compliant with financial crime regulations. Effective collaboration
within these institutions is pivotal for enhancing the customer
experience while managing these costs. Leveraging emerging
technologies alongside existing solutions can empower institutions
to achieve their objectives and deliver optimal customer
outcomes."
Download the True Cost of Financial Crime Compliance Report –
2023.
About LexisNexis Risk Solutions
LexisNexis® Risk Solutions includes seven brands
that span multiple industries and sectors. We harness the power of
data, sophisticated analytics platforms and technology solutions to
provide insights that help businesses and governmental
entities reduce risk and improve decisions to benefit people around
the globe. 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. For more information, please
visit LexisNexis Risk Solutions and RELX.
Media Contact:
Ade O'Connor
Senior Manager, International Media Relations
+44 7890 918 264
Ade.O'Connor@lexisnexisrisk.com
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