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LexisNexis Risk Solutions highlights the mounting challenges financial institutions face due to the intricate compliance regulations and the evolving tactics of financial criminals.
Globally, costs associated with financial crime compliance surpass $206 billion. These staggering costs represent over 12% of global research and development (R&D) expenses, translating to $3.33 monthly for every working individual worldwide.
In the realm of financial crime, a significant number of professionals are already leveraging AI and advanced analytics. About 71% of experts in the field suggest that their entities enhance data usage with advanced analytics. Moreover, 72% utilize analytics and AI to refine their compliance processes.
But with progress, there are obstacles. Issues like inconsistent data quality, segmented data repositories, archaic systems, and internal collaboration barriers inflate compliance activities and expenses.
The research indicates that financial establishments in the EMEA region and their clientele bear heftier financial crime compliance costs than other areas. Notably, EMEA’s costs eclipse the U.S./Canada’s by an impressive 39.8%. Such disparities echo the growing complexity of regional compliance stipulations.
Harnessing enriched payment data emerges as a pivotal strategy in combating intricate financial malfeasances. A whopping 83% of survey participants are inclined to focus on this data. Its advantages span swifter transaction times, reduced transaction denials, and superior risk control. More importantly, it uplifts the user experience while simultaneously cutting down non-compliance risks and potential exposure to financial malpractices.
On a global scale, 78% of enterprises, and specifically 80% in EMEA, opine that the tangled web of regulations and sanctions hampers their operational flow. However, regions like APAC and LATAM offer more budget-friendly compliance solutions, even with considerable compliance outlays. The compliance expenses in APAC stand at 74.5% of the U.S./Canada’s, with LATAM trailing at 24.7%.
Leading figures in global financial institutions, including CEOs, vice presidents, and directors, remain proactive. While they grapple with an ever-growing maze of financial crime compliance norms, a notable 85% prioritize improving the customer experience. This underscores their dedication to building trust and ensuring satisfaction amidst escalating financial risks.
Efforts are majorly centered on elevating the effectiveness and efficiency of compliance pertaining to payments. An impressive 74% of institutions worldwide deem this as a pressing concern.
Grayson Clarke, SVP at LexisNexis Risk Solutions, emphasizes the fiscal ramifications of crime on business revenue and consumer expenses. In striving for societal benefits, there’s a concerted effort between financial entities and regulatory bodies to set forth vital protocols. While indispensable, these endeavors aren’t cost-free. The study accentuates the monumental efforts of financial establishments in aligning with crime regulations. Streamlined collaboration within these establishments is crucial for boosting customer experiences and judiciously managing expenses. Marrying emerging technologies with current solutions offers the promise of achieving institutional goals and fostering excellent client results.