The total cost of financial crime compliance in the EMEA region has reached $85 billion, with 72% of businesses in Africa attributing cost to technology.
This is according to a report, True Cost of Financial Crime Compliance Study - EMEA, conducted by Forrester Consulting on behalf of LexisNexis Risk Solutions.
The study is based on responses from 482 senior decision-makers responsible for financial crime compliance at EMEA-based financial institutions, including the Baltic States, France, Germany, the Netherlands, Poland, Kenya, South Africa, Saudi Arabia and the UAE. It highlights key pain points related to the cost, current state and challenges presented by financial crime compliance operations.
The research shows that technology costs associated with networks, systems, and remote work have risen for 70% of organisations, particularly for 72% of firms in Africa.
Similarly, 70% of financial institutions have confirmed cost escalations for technology related to compliance and know-your-customer (KYC) software.
Labour costs
The report notes that labour costs are driving increases in expenses, emphasising the substantial investment required in highly qualified resources to meet stringent compliance requirements. Specifically, 72% of organisations reported rises in labour costs in the past 12 months, while labour costs associated with training have increased at 70% of financial institutions.
According to the report, cryptocurrencies, digital payments, and AI technologies are emerging as tools for illicit activities: 25% of companies identified financial crime involving digital payments, while 23% reported heightened use of both cryptocurrencies and AI,
Growing concerns include trade-based money laundering and financial crime threats in the supply chain. Research indicates 58% of respondents saw a rise in trade-based money laundering, while 59% noted increased corruption and bribery in the supply chain.
Matt Michaud, global head of financial crime compliance at Lexis Nexis Risk Solutions, says, “The cost of financial crime compliance is clearly rising for financial institutions across EMEA which is being felt by teams across the entire compliance workflow.“
LexisNexis Risk Solutions recommends that organisations leverage privacy-preserving technologies and advanced analytics to identify new crime patterns to outpace cybercriminals and counter sophisticated financial crime.
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