New regulation and advancing criminal methodologies have caused the costs of avoiding financial crime to soar over the past two years, according to LexisNexis risk solutions.
Nearly two thirds (63 per cent) of financial crime compliance professionals have seen costs increase in that time, with the impact felt most keenly by retail banks and asset managers with more than £100bn in assets under management.
Increased regulation was most commonly blamed for the rise, as 60 per cent of professionals said this was the root cause of increasing technological investment. Nearly half said advancing criminal methodologies were having a similar effect.
“I’ve never in 20 years seen the volume of regulatory change we’re seeing in the financial crime arena,” said one financial crime compliance leader surveyed. “This and the broader change in terms of structural reform... banks are having to spend more and more money.”
Dean Curtis, UK managing director at LexisNexis Risk Solutions, added: “A large number of firms have thus seen their costs spiral, a situation often exacerbated by legacy technology unfit to cope with the complexities of modern financial security and regulation, driving the need for more human resource.”
LexisNexis's previous research in 2015 found that major financial institutions were exhausting billions of pounds annually on financial crime compliance – a number which has risen, according to the new data.
Some are hiring more staff to deal with the adversities – 41 per cent of the institutions surveyed said regulatory complexity was an impetus for taking on more experienced employees, while 46 per cent said evolving criminal threats were forcing them to do the same.
“Slowly the industry is working out what technology does best and what humans do best and how these work together effectively. This is critical in transitioning to an agile approach which keeps pace with financial crime, whilst maintaining a firm rein on costs,” said Curtis.