Worldwide regulatorymeasuresto curb financial crime have cost financial institutions, but not at the expense of CX: survey

Based on the May/June 2023 perspectives of 1,181 professionals in financial crime compliance from small, medium and large companies across the US/Canada, APAC, Europe, the Middle East and Africa (EMEA) and LATAM regions, a report on how financial institutions navigate the expenses and challenges tied to evolving financial crime compliance requirements has reached some conclusions.

The worldwide financial cost of compliance is estimated at US$206.1bn, equivalent to US$3.33 per month for each working-age individual on Earth. In the report, 71% of professionals in financial crime compliance polled indicated that their organizations were already enhancing data utilization through advanced analytics. Additionally, 72% confirmed that they were employing analytics and AI to enhance their compliance procedures. Other avenues sought for reducing compliance costs included changes in ways of working; modernizing outdated legacy systems, reducing silos and improving data quality. 

Among the EMEA respondents, financial institutions and their customers continued to incur a more substantial expense for financial crime compliance compared to other regions. The overall cost of financial crime compliance in EMEA surpassed that of the US/Canada respondents by 39.8%. Globally, 78% of polled organizations (80% in EMEA) indicated that the intricate network of regulations and sanctions act as a constraint on their business operations.

In contrast, data from APAC and LATAM respondents showed more cost-effective compliance, despite significant compliance expenditure. The financial compliance expenses in APAC amounted to 74.5% of those in the US/Canada, while costs for LATAM respondents were 24.7% in comparison. Also:

    • 85% of respondents placed enhancing customer experience (CX) at the top of their priority list, even in the face of proliferating financial threats.
    • 74% of respondents across all polled regions indicated they placed a high priority on optimizing the efficiency and efficacy of financial crime compliance concerning payments.

According to Grayson Clarke, Senior Vice-President, LexisNexis Risk Solutions, which commissioned the survey: “Legislators and regulators collaborate tirelessly with financial institutions to establish necessary mandates (but) these endeavors aren’t without costs…,” adding that leveraging emerging technologies alongside existing solutions can empower institutions to achieve their objectives and deliver optimal customer outcomes.”