NEW YORK—To assess the financial impact from growing anti-money laundering (AML) compliance rules, credit unions can look overseas.
Over the past two years, overall anti-money laundering compliance costs in Europe have increased by 21% and financial institutions expect these to grow by a further 19% in 2017, while sanction compliance costs are expected to rise by 17% on average.
These are the results of a survey carried out between April and June 2017, conducted by LexisNexis Risk Solutions, interviewing 250 executives in charge AML compliance in five European countries, Business Insider reported.
“Such a development can be put into context against the backdrop of the fourth EU Money Laundering Directive having been transposed this year into various national legislations. This update to the directive calls for financial institutions to conduct enhanced due diligence on prospective clients,” Business Insider stated.
The study found the True Cost of AML Compliance for European financial services companies equals US$83.5 billion.
According to the surveyed professionals, labor is the most significant component of AML compliance costs, with costs scaling upwards for larger firms and expected to increase in the coming years, Business Insider explained.
“The main challenge financial institutions are facing is the optimization of risk management technology, as they attribute roughly three-quarters of their overall AML compliance spend to labor and the remaining percentage to technology,” Business Insider said.
Know Your Customer and AML compliance programs in particular, which concentrate over 70% of spend, are sizeable labor components in which intelligent risk management technologies could help to optimize the time of the compliance staff, enabling them to place their focus on activities such as human investigations and other reporting tasks, Business Insider said.