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LexisNexis Risk Solutions has released the findings of its latest True Cost of Financial Crime Compliance Study, the APAC edition.
The survey identifies the drivers affecting financial crime compliance and highlights spending trends. The study also explores the business impacts of changes in the financial crime compliance environment particularly regarding new regulations and identifies challenges and impacts associated with the COVID-19 pandemic.
The report found that the total projected cost of financial crime compliance increased for larger financial institutions in the Asia-Pacific (APAC) market. For APAC financial companies that participated in the 2020 study, the cost of compliance was USD 12.06 billion, with larger financial institutions representing a sizable portion at USD 6.49 billion. India represents 46% of these costs at USD 5.51 billion since there are more financial services institutions in that market compared to others.
The report finds that companies with above average compliance spend on technology solutions are less challenged during the customer acquisition process: 39% of mid to large companies indicated this as a challenge compared to 70% of them who had below average technology expenditure.
Companies across APAC that allocate a higher percentage of compliance spend to technology have comparatively lower overall compliance cost at an average of USD 14.6 million annually compared to USD 18.1 million for those dedicating higher spend to labour. Financial institutions that allocate a larger share of their financial crime compliance costs to technology also have lower costs at USD 61,300 per compliance professional annually compared to USD 115,400 for companies that allocate more for labour.
A large majority of APAC financial companies expect COVID-19 to further impact compliance cost over the next 12 to 24 months. 69% of firms expect increased costs will involve technology spend with only 31% seeing it as a driver of labour costs.
The APAC study surveyed 231 decision-makers who oversee KYC remediation, sanctions monitoring, financial crime transaction monitoring and/or compliance operations across four APAC countries.
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