08 Apr 2020
A new report found financial institutions spent $181 billion on financial crime compliance worldwide last year, with European firms spending three to four times more than their counterparts in North America.
The True Cost of Financial Crime Compliance Global Report, released Tuesday and compiled by LexisNexis Risk Solutions, estimated that the annual cost of financial crime compliance in Europe was $137 billion, followed by North America ($32 billion), Asia Pacific ($6 billion), Latin America ($5 billion), and South Africa ($2 billion). The estimates were determined by polling 898 financial crime compliance decisionmakers, compiling an average spending amount for large/medium and small institutions in a particular market, then multiplying the average by the number of such firms in a given market.
The most expensive countries for financial crime compliance were the United Kingdom ($50 billion) and Germany ($48 billion), followed by the United States ($26 billion), France ($21 billion), Italy ($16 billion), and Canada ($5 billion). Financial institutions surveyed included banks, investment firms, asset management firms, and insurance companies. The compliance professionals surveyed oversaw know your customer (KYC) remediation, sanctions monitoring, anti-money laundering (AML) transaction monitoring, and/or compliance operations.
The United States—which, at over 6,000, has far and away the largest number of financial institutions of any region—also has a large percentage of firms managing under $10 billion in assets. These smaller firms by and large had smaller AML compliance costs, the survey found. The United Kingdom had the second most institutions, with 2,200, followed by Germany (1,600).
The LexisNexis survey found that European financial institutions generally had larger compliance departments than those in other regions, with an average of 83 full-time employees in their financial crime compliance departments, compared to an average of 57 FTEs in North America. European compliance departments also needed more time to complete business account due diligence, an average of 47 hours versus 25 hours in North America.
By Aaron Nicodemus, Compliance Week, 7 April 2020
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