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The cost of AML compliance in Asia Pacific

Source: Asia Insurance Review | Aug 2019

LexisNexis Risk Solutions’ latest report finds that 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.
The report, titled The True Cost of Anti-Money Laundering (AML) Compliance: Asia Pacific Edition represents the views of decision makers within the financial crime function who oversee know your customer 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.
Main findings of the survey:
  • True cost of AML: Midsize to large financial firms in Indonesia, Philippines and Singapore (assets totalling $10bn or more) have significantly larger annual average compliance outlays than smaller firms, ranging from $11.95m to $13.93m for larger firms and $1.18m to $2.08m for smaller firms.
  • High labour costs: Labour represents a sizeable portion of AML compliance spend, which drives higher costs at larger firms. As a result, these firms are implementing labour-related steps to address the impact of non-bank payment providers and systemic risks, including enhanced training and controlling operations screening hours.
  • Limited use of new technologies: Despite the labour-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.
“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,” said LexisNexis Risk Solutions senior vice president, US commercial markets and global market development Thomas Brown. “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 on boarding.”
“Financial executives who face personal liability for non-compliance can be wary of foregoing human input with regard to risk decisions,” said LexisNexis Risk Solutions director, market planning Douglas Wolfson. “However, aligning humans with technology to help compliance teams analyse 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.” A 
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