A study by LexisNexis Risk Solutions estimates that Australian financial services firms will spend over US$2.54 billion to comply with financial crime in 2022

Retail and e-commerce merchants expected to pose highest money laundering risks

SYDNEYJune 15, 2022 /PRNewswire/ — LexisNexis® Risk Solutions today released its first Australia edition of the LexisNexis True Cost of Compliance™ study. The study found that Australian financial services firms are expected to spend more than a collective US $2.54 billion (USD $3.6 billion) on financial crime compliance, due to increased recruitment of compliance staff and the complexity of financial crime prevention.

The study, which surveyed 50 Australian market decision makers between December 2021 and February 2022 and is part of a larger Asia Pacific regional study, found that the exposure of Australian financial firms to financial crime has increased over the past 18 to 24 months. Eighty percent (80%) of Australian compliance professionals in financial firms ranked money laundering as the highest risk in their compliance operations. Respondents also indicated that third-party professional service providers, such as accountants and lawyers, played a role in facilitating financial mules to launder the proceeds of underlying crimes.

Rising anti-money laundering (AML) regulations, evolving criminal threats and the continued impacts of the pandemic have resulted in increased financial crime compliance costs to approximately US $19.2 million (USD $27.6 million) for major Australian financial institutions and has led to increased investment in labor and technology.

Main results of The 2022 True Cost of Compliance Study – The Australian Edition:

  • Labor as a Driver of Compliance Costs More than two-thirds of financial institutions surveyed said they had increased their compliance staff since 2019. Labor and training accounted for 54% of average compliance costs, while technology, including adding or maintaining networks or systems that support remote work during the pandemic, accounted for 41% of average compliance costs. % costs.
  • Use technology to resolve compliance issues – Large financial institutions that have invested in technology solutions to support financial crime compliance efforts have experienced less severe impacts on compliance costs and operations (almost in the US $17.5M or AUD $25 million per year), greater efficiency and fewer challenges related to the pandemic. Those who spent less than the industry average on technology spent on average US $18.9 million (USD $28.7 million) on annual financial crime compliance costs.
  • Increased exposure to a range of financial crimes – Financial mules and financial crimes involving digital payments are on the rise and have been a major contributor to increased financial crime compliance costs. Respondents reported increased exposure to trade-based money laundering (TBML), third-party fraud (supply chain corruption, professional advisers), proceeds trafficking, and criminal use of new technologies and methods, including cryptocurrency.

“E-commerce and retail have been ranked as the most at risk for money laundering by Australian financial institutions,” said David Haynes, Vice President at Lexis Nexis Risk Solutions. “Amid growing regulatory pressures and ever-evolving threats, retailers and e-commerce merchants must be prepared for the rising costs driven by digital transformation.”

Methodology
The True Cost of Compliance APAC study surveyed 253 banking, investment, asset management and insurance decision makers within the financial crime function across Australia, China, India, Japan and Malaysia. The organizations represented banks and investment, asset management and insurance companies.

Download a copy of The True Cost of Financial Crime Compliance Study – Australia Edition.

About LexisNexis Risk Solutions
LexisNexis® Risk Solutions harnesses the power of data and advanced analytics to deliver insights that help businesses and government entities reduce risk and improve decisions for the benefit of people everywhere. We provide data and technology solutions for a wide range of industries, including insurance, financial services, healthcare and government. Based in the Atlanta metro area, Georgia, we have offices around the world and are part of RELX, a global provider of information-based analysis and decision-making tools for professionals and enterprises. For more information, please visit www.risk.lexisnexis.com and www.relx.com.

Media Contact:
LAU joy
+852 6091 6839
joy@montiethsprg.com.hk

Joyce LEE
+852 9883 9321
joyce@montiethsprg.com.hk

Logo – https://mma.prnasia.com/media2/494562/LexisNexis_Risk_Solutions_Logo.jpg?p=medium600

.

Leave a Comment