Anti-money laundering compliance costs in Asia-Pacific rises 10% in past 24 months

Survey covered banks, investment firms and money services bureaus across Malaysia, Indonesia, Singapore and the Philippines

Anti-Money Laundering (AML) compliance costs rose 9% to 10% during the past two years with growth expected to continue at a similar rate over the coming year, according to the latest APAC (Asia Pacific) survey, "The True Cost of Anti-Money Laundering (AML) Compliance: Asia Pacific Edition," released by LexisNexis® Risk Solutions.

The report represents the views of decision-makers within the financial crime function who oversee Know Your Customer (KYC) remediation, sanctions monitoring and/or AML transaction monitoring at banks, investment firms, asset management firms and money services bureaus across Indonesia, Malaysia, Singapore and the Philippines.

Key findings of the survey:

•  Midsize to large financial firms in Indonesia, Philippines and Singapore (assets totaling greater than US$10 billion) have significantly larger annual average compliance outlays than smaller firms, ranging from US$11.95 to US$13.93 million for larger firms and US$1.18 to US$2.08 million for smaller firms.

•  Labor represents a sizeable portion of AML compliance spending, which drives higher costs at larger firms. As a result, these firms are implementing labor-related steps to address the impact of non-bank payment providers and systemic risks, including enhanced training and controlling operations screening hours.

•  Despite the labor-intensive nature of the AML function within financial firms, the report reveals limited use of newer technologies across smaller and larger firms in the region.

The study reveals that business de-risking is a top driver for AML functions among financial institutions in the APAC region, though significantly more Indonesian firms (78%) place it as a leading driver compared to those in other markets.

"As compliance regulations grow in complexity and translate into more alert volumes, it will become increasingly difficult for APAC financial firms to keep pace, manage false positives and avoid non-compliance issues," says Thomas C Brown, senior vice president, US commercial markets and global market development at LexisNexis Risk Solutions. "However, technology can ease the burden of effectively managing the impact of AML compliance on the business. It's not just about managing direct costs, but also the indirect and opportunity costs that are historically harder to measure, such as those associated with lost prospects and future revenues linked to delays at onboarding."

"Financial executives who face personal liability for non-compliance can be wary of foregoing human input with regard to risk decisions," says Douglas Wolfson, director, market planning at LexisNexis Risk Solutions. "However, aligning humans with technology to help compliance teams analyze existing data, have access to other external information and make decisions from a more holistic view of the customer can result in a more effective means of preventing financial crime over the long term." 


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17 Jun 2019

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