KYC for onboarding and customer risk profiling were cited as the biggest challenges for APAC financial institutions in a LexisNexis Risk Solutions study.
LexisNexis Risk Solutions has released a new report estimated that the global spend on financial crime compliance at financial institutions is projected to reach USD 213.9 billion in 2021.
This compares to the USD 180.9 billion recorded in 2020, where the majority of the year-over-year increase is represented by Western Europe and the US.
The report is based on a survey of 1,015 financial crime compliance decision-makers at financial institutions including banks as well as investment, asset management and insurance firms globally.
Western European countries and the US represent 82.7 percent of global total projected costs for 2021. Germany outsizes all other countries with cost increases of USD 9.6 billion. Cost increases in the US are estimated at USD 8.8 billion.
Compliance challenges related to customer risk profiling, sanctions screening, regulatory reporting, identifying PEPs, KYC for account onboarding and efficient alerts resolution were all ranked highly as key challenges.
While there are differences by region regarding the degree to which each challenge is more heightened, KYC for onboarding and customer risk profiling were cited as the biggest challenges for APAC financial institutions, with PEP identification showing a noticeable increase.
Cryptocurrency, trade-based money laundering, professional enablers, and money mules are continuing to present difficulties for financial crime compliance professionals.
According to the report, the ongoing pandemic has left a significant imprint on compliance departments, exacerbating existing issues and leading to an increase in the time and spending needed for due diligence.
This was particularly the case for firms that had existing operational inefficiencies, high alert volumes, and more manual work. Financial institutions that had technology solutions supporting financial crime compliance efforts saw smaller year-on-year financial crime compliance cost increases and fewer pandemic-related challenges.
The report found that a large majority of APAC financial institutions surveyed expect the Covid-19 pandemic to further increase compliance costs over the next 12 months.
The APAC study markets included India, Singapore, Indonesia and the Philippines.
The full report is available here.