Against the backdrop of increasingly complex financial crime and banking regulations, firms in the Asia Pacific region are grappling with increasing compliance costs and bad actors that leverage the latest technology.
The majority of financial institutions in APAC (98 percent) saw an increase in financial crime compliance (FCC) costs, amounting to $45 billion in 2023, according to a recent LexisNexis study. 75 percent cited the need for highly skilled compliance professionals as the primary driver of higher costs.
Of the total compliance costs, labor and resource costs accounted for 41 percent of total compliance costs, followed by technology costs (32 percent). On the latter, 70 percent cited a rise in costs associated with compliance and know-your-customer software while 74 percent said that networks, systems, and remote work-related costs were higher.
New Crimes: Crypto, AI, Digital Payments
Adding to the complex regulatory landscape is the increasing use of new technologies for illicit activities including cryptocurrencies, digital payments and AI.
Such financial crime has increased by more than 20 percent in the past 12 months with 23 percent of respondents identifying greater use of both crypto and AI.
Reevaluating Financial Crime Compliance Processes
As a result, financial institutions are now reevaluating their financial crime compliance processes. Some of the changes expected to take place within financial institutions this year include enhancing KYC procedures, internal compliance solutions, data quality, transaction monitoring and anti-money laundering processes. Cutting compliance program costs in this period is also a priority for 81 percent of the respondents.
The results were based on an annual survey commissioned by LexisNexis Risk Solutions to Forrester Consulting. Financial institutions surveyed were based in five key markets in Asia: Australia, China, India, Japan and Singapore.
