True Cost of Financial Crime Compliance Study 2020

As technology removes global commerce barriers and opens new markets, it also fuels growing opportunities for cross-border money laundering and financial crime. Combining this heightened risk environment with quickly evolving, and very exacting, multi-national regulatory governance has resulted in a challenging and costly financial crime compliance climate. 

According to a recent study, the total projected cost of financial crime compliance across all financial institutions in the key markets of APAC, EMEA, LATAM and North America is $180.9 billion. This global report takes a detailed look into the factors driving financial crime compliance efforts for leading financial institutions around the world using insights from the LexisNexis Risk Solutions 2019 True Cost of Anti-Money Laundering (AML) Compliance regional studies. 

It also illustrates how businesses utilizing targeted financial crime compliance technology tools are finding routes to capture enterprise efficiencies and overcome the negative cost and operations impacts of compliance. 

he study breaks down the cost of financial crime compliance by region: 

APAC: $6.1B
EMEA: $138.8B
LATAM: $4.5B – See these regional studies in Spanish: Argentina, Chile, Columbia, Mexico
North America – U.S. and Canada: $31.5B

It also highlights on a global level, the average increase in financial crime compliance costs over the last 24 months was 7% and that by the end of 2019 most global respondents expected an average increase in compliance costs of 12%.  

The report explores the global impacts of increased financial crime compliance expectations on productivity and customer acquisition. The report details how 53% of global respondents feel financial crime compliance processes have a negative impact on productivity. Global estimates are that an average of 63 hours of annual lost productivity per full time equivalent (FTE) compliance analyst can be attributed to job dissatisfaction. Similar numbers apply on the customer acquisition front, with 55% of global respondents stating financial crime compliance processes have a negative impact on customer acquisition.      

The overview also details the main global drivers behind financial crime compliance initiatives:

66%: Meeting the standards for regulatory compliance
65%: Minimizing reputational risk 
55%: Completing business de-risking
50%: Improving business results 

The report illustrates the biggest and most universal financial crime compliance challenges and includes a more nuanced look into the risk realities unique to each region. 

Key global challenges for financial crime compliance screening operations: 

56%: Customer risk profiling 
55%: Sanctions screening
48%: Efficient alert resolution
36%: Positive identification of politically exposed persons (PEPs)
39%: Know Your Customer (KYC) for onboarding 
39%: Regulatory reporting

The global overview also takes a closer look at firms utilizing multiple, more targeted financial crime compliance technologies to assess the combined risk of the individual and the transaction from a holistic perspective. The study provides details into improved efficiencies these firms are realizing and includes results that illustrate decreased cost of compliance per FTE and reduced opportunity costs associated with onboarding friction and lost business. The study explores how the combination of innovative technology solutions and top-quality digital and physical risk intelligence can make a difference in lowering negative compliance impacts and increasing efficiencies in key compliance and onboarding workflows, as well as across the enterprise.