Global Spend on Financial Crime Compliance at Financial Institutions Reaches $213.9 Billion in 2021

LexisNexis Risk Solutions, a leader in providing essential information to help customers predict and manage risk, recently released its annual True Cost of Financial Crime Compliance Global Report, based on a survey of 1,015 financial crime compliance decision makers at financial institutions including banks as well as investment, asset management and insurance firms globally. 

According to the report, the projected total cost of financial crime compliance across all financial institutions reached $213.9 billion in 2021, surpassing the $180.9 billion recorded in 2020.  The majority of this sizeable year-over-year increase is represented by Western European counties and the United States, which continue to represent 82.7% of global total projected costs. 

The report also shows less Consensus on Operational Challenges, with KYC for onboarding as the top challenge for APAC, Customer risk profiling as the top challenge for Western Europe & Latin America, and Sanctions screening for North America & South Africa. 

The survey found that financial institutions allocating a larger share of their financial crime compliance budgets to technology experience less severe financial and compliance operations impacts. For instance, only 42% of those spending more than half their financial crime technology budget on technology reported significantly negative impacts from Covid-19 on their customer risk profiling, compared with 57% reported by those allocating less than half on technology. Similarly, those focusing more on technology were impacted less by the top compliance challenges as cited by those taking a more manual approach.

Leslie Bailey, vice president of LexisNexis Risk Solutions, said, “Criminals will never cease to become more sophisticated, but a multi-layered solution approach to financial crime compliance can facilitate a more cost-effective, efficient compliance approach, as well as one that benefits the larger organization. Financial institutions should investigate both the physical and digital identity attributes of their customers, leveraging data analytics to assess risks and behaviors in real time.”