COVID-19 Pandemic Has Driven New Compliance Costs, According to Report

NEW YORK—The COVID-19 pandemic has exacerbated the rising cost of compliance for financial institutions, a new report reveals.

The pandemic has increased the opportunity for financial scams and wrongdoings as companies and individuals shift to online processes and transactions in view of social distancing rules and work-from-home arrangements, noted The Asset.

Globally, the estimated cost of financial crime compliance across all financial institutions reached $213.9 billion last year, surpassing the $180.9 billion recorded in 2019, data and analytics services provider LexisNexis Risk Solutions shared in its latest True Cost of Financial Crime Compliance Global Report.

Much of the sizeable expenditure increases came from Western Europe and the United States, which collectively represented 82.7% of the total projected costs. Germany and the U.S. bore the bulk of cost increases at $9.6 billion and $8.8 billion respectively, The Asset noted in its analysis.

Meanwhile, Asia-Pacific saw a 27.2% growth in financial crime compliance costs to $6.59 billion. Expenditures rose 21.7% to $3.8 billion in Singapore, 32.1% to $2.1 billion in Indonesia, and 43.8% to $690 million in the Philippines.