UK financial services firms are spending more than £21,000 per hour fighting financial crime and fraud through onboarding and compliance screening processes.
This is according to the latest True Cost of Compliance report from LexisNexis Risk Solutions.
Go deeper with GlobalData
The study of 254 regulated UK financial services firms found compliance costs rose by 12% in 2023, with the vast majority of firms reporting an increase. Just 2% said costs had fallen. It means that collectively, the sector is now spending an astronomical £38.3bn on compliance each year, equivalent to Estonia’s GDP.
It is estimated that at least £36bn is laundered in the UK each year
Firm-level financial crime compliance (FCC) cost increases have largely been driven by investment in technology over the past three years, according to the report, growing at twice the rate of employee-related costs.
Technology-related roles also now, for the first time, make up over half of all FCC recruitment and training costs, up from a third in 2022, as firms build teams of technologists capable of operating the technology and interpreting the outputs.
Increasing customer volumes was also cited as a key driver of costs, with 52% of firms reporting an increase and one in six reporting customer numbers rising by over 20%.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataDespite the increase in customers, firms reported a significant drop in the cost of Know Your Customer (KYC) and identity verification operations, as an overall share of FCC costs, 22% to 15%, as automation yields process efficiency gains. Similar benefits were realised in AML screening checks, alert remediation and internal investigations.
Steve Elliot, Managing Director of LexisNexis Risk Solutions said: “This year’s study features some stand-out good news stories, with firms and their customers reaping the benefits of sustained investment in technology over the past three years. Firms appear to be implementing more thorough financial crime controls throughout the customer journey, including more rigorous checks at onboarding and placing greater emphasis on ongoing monitoring, while the increased automation should be helping them deliver better customer experiences.
“What’s particularly encouraging is that, despite around 80% of Customer Due Diligence (CDD) processes on average now being automated, there’s no sign of a slowing in investment pace, with KYC, fraud checks, alert remediation and AML screening all being earmarked as priorities for further development.”
