Due diligence is taking longer and the cost of reducing financial crimes is expected to increase
The financial services sector has faced significant challenges in the past year with compliance among the headaches faced by institutions.
Newly released results from a survey of Canadian and American compliance professionals reveals that around four in ten have faced one or more of the top three issues for financial institutions during the pandemic.
These challenges come at a time when regulators have been increasing penalties for firms that have breached compliance requirements.
Accessing information sources for Know Your Customer (KYC) due diligence; longer times to complete due diligence for new customer accounts; and challenges tied to delayed onboarding.
The survey was conducted by LexisNexis and included compliance professionals from banks, investment firms, asset management firms and insurance firms, whose roles include KYC compliance and anti-money laundering controls.
Financial crime challenges
The ongoing COVID crisis is making it harder for institutions to monitor and prevent financial crimes, while their incidence was already rising pre-pandemic.
Almost 8 in 10 respondents said they expect the cost of financial crime compliance to increase over the next two years with technology expected to take a large share of the costs compared to labour (68% vs 32% of respondents).
"The events of 2020 have been unprecedented and financial institutions must prepare for increased risk of financial crime for the foreseeable future," said Leslie Bailey, senior director of financial crime compliance strategy for LexisNexis Risk Solutions. "Compliance teams can optimize resources to better navigate the new normal brought by the pandemic while maintaining the customer experience with a multi-faceted approach that includes efficient technology, intuitive analytics and extensive global risk intelligence."
