LexisNexis Risk Solutions has released a report on the cost of financial crime compliance throughout the globe. Compliance teams are under greater stress and the costs of technology and labour are rising.

The report reveals that the total cost of financial crime compliance in North American, the Middle East, Africa, the Asia-Pacific region and Latin America amounts to US$180.9 billion per annum. LexisNexis surveyed 898 people who oversee compliance operations at their companies on the subject of processes such as sanctions monitoring, know-your-customer or KYC remediation, AML (anti-money-laundering) control, transaction monitoring and other things. Its report reveals the following.

• Europe and US are the largest regional markets for financial crime compliance. More than 6,000 financial institutions in the US spend more on financial crime compliance than any comparable number in other regions. Average annual financial crime compliance costs are highest for mid/large sized financial institutions (more than US$10 billion in total assets) in the UK, Germany, France, Italy and Holland.  
• Labour accounts for 57% of spending on financial crime. Other factors include complex regulations, limitations on data privacy, sanction violations. Labour costs in Europe and the Middle East stand at 62%. In the Asia-Pacific area, the average is 54%.
• It is more and more time-consuming and expensive to do background checks on people and bodies corporate. The average time required to 'onboard' a mid-sized corporation has increased from 21 hours in 2017 to 36 hours in 2019.
• Non-bank payment providers are a problem for compliance officers at financial companies, particularly in Latin American and Canada. The number of alerts is going up everywhere, as is "correspondent banking risk." Compliance teams are under greater stress and the costs of technology and labour are rising.
• The tribulations of financial crime compliance are harming financial institutions' productivity and efforts to acquire new customers, especially in Europe, the Middle East and Latin America. Taking all regions as a whole, costs rose an average of 7% per annum in each of the past two years.