Asia Pacific financial institutions were most likely to consciously violate rules and incur anti-money laundering fines rather than comply with regulation compared to those in other regions, according to a recent survey.

Almost 90 percent (87 percent) of APAC respondents to a survey by financial crime risk data firm ComplyAdvantage said they consciously chose to violate rules and incur anti-money laundering fines «all the time», «regularly» or «occasionally».

Within the APAC region, players were least likely to violate laws and incur fines rather than comply in Singapore (72 percent), Hong Kong (90 percent) and Australia (95 percent). This compared to the global average of 80 percent which includes North America’s 79 percent and Europe’s 76 percent. 

The survey was conducted in the fourth quarter of 2020 with 600 C-suite and senior compliance decision-makers from financial institutions across North America, Europe and APAC. 

Payments in a Pandemic

The report suggests that compliance burdens have likely increased during the coronavirus pandemic due to the increased usage of digital payments with 76 percent of regional respondents claiming that they filed more suspicious activity reports in 2020 compared to the previous year. 

«As a result of Covid-19, financial institutions today handle a much higher volume of digital payments, many of which need to be processed near-instantly,» said Jaede Tan, APAC managing director at ComplyAdvantage. 

«Few of them have the processes and technologies in place to be able to carry out due diligence checks and where necessary, block the transactions, in milliseconds.» 

Top Pain Point: Cybersecurity

Compliance risk aside, financial institutions are also increasingly concerned about their own defenses with 55 percent ranking cybersecurity as their top pain point. As a result, 65 percent of APAC respondents plan on upgrading their legacy systems in 2021. 

Improving fraud detection was cited as a top priority by 68 percent of respondents with 59 percent planning to replace or upgrade their transaction monitoring systems. 

«In the interest of maintaining profit, financial institutions often let unknown or even questionable transactions go through,» Tan added. «This exposes them to punitive action from the authorities and, of course, reputational damage.»