A joint survey by SWIFT and Dow Jones Risk and Compliance, revealed that a large majority (75 percent) of anti-money laundering (AML) professionals believe the current geopolitical landscape presents new risks and challenges for preventing financial crime at their organisations.
To address these risks, more than half or 54 percent of respondents are planning to increase their investment in RegTech in the next three to five years, as the majority (59 percent) say technology has improved their company’s ability to tackle AML, KYC and sanctions requirements.
Joel Lange, managing director, Dow Jones Risk and Compliance, said, “The shifting geopolitical environment has created an additional layer of complexity for tackling financial crime around the world. As the political and economic landscape continues to impact international trade, data protection, and tax cooperation, the need for greater transparency and more effective information sharing across borders is more important than ever.”
The study further highlighted that as financial crime risks continue to evolve, increased regulatory expectations represent the greatest challenge (69 percent) for respondents, followed by concerns surrounding increased enforcement of current regulations (50 percent), and the need to understand regulation outside of their home jurisdiction (42 percent).
“Technology can play a key role in providing new and enhanced capabilities that strike a balance between preventing criminal activity, meeting regulatory requirements and containing costs,” said Paul Taylor, director, Compliance Services, SWIFT. “The most sophisticated financial crime compliance solutions help mitigate risks and boost efficiency in several ways, from managing workloads to automating payments monitoring and reducing false positives, enabling compliance teams to focus on more strategic risk policy and financial crime prevention work.”
Specific regulations, such as the OFAC and EU 50 percent Rules as well as the FinCEN CDD Rule (both new in 2017 survey), are cited by over 70 percent of respondents as contributing to increased workloads for compliance departments. More than half of respondents say FATCA and the Fourth EU Money Laundering Directive are regulations that add to existing workloads.
“As a regional financial hub, the UAE recently adopted enhanced regulations in anti-money laundering,” said Khaled Moharem, head of Middle East and North Africa, SWIFT. “Innovative technical solutions such as RegTech will help the financial community in the region mitigate the risks and implement the right compliance policies while aligning themselves with international practices.”
The annual survey – comprised of responses from more than 500 compliance and anti-money laundering professionals around the world – assesses the current regulatory environment and the impact of new regulation on international and regional banks’ compliance departments.