Financial Crime World

Financial Crime Compliance Costs Surge as Alert Volumes Double

Financial Institutions Face Increasing Challenges in Philippines

MANILA, Philippines - The cost of financial crime compliance in the Philippines has seen a significant surge this year, with alert volumes at least doubling since last year. This growing workload is taking a toll on employee satisfaction, with more firms concerned about it than ever before.

According to a recent study by LexisNexis Risk Solutions, the average time required for analysts to clear each type of alert has increased significantly. For example:

  • Analysts facing higher risks with real estate and media/gaming/gambling accounts are taking up to 32 hours to clear sanctions alerts.
  • Mid-to-large organizations are taking around 16 hours to clear such alerts.

COVID-19 Adds to the Burden

The study found that COVID-19 has added to the financial crime compliance operations and costs. Over one-third of mid-to-large firms expect to spend more over the next 12-24 months to address the continued negative impacts of the pandemic, with a majority of this spending going towards risk technology.

Experts Weigh In

A representative from LexisNexis Risk Solutions noted: “The COVID-19 pandemic has heightened compliance operations challenges, particularly through difficulty accessing KYC sources of information, increased alert volumes, and more manual work/time.”

Mid-to-large financial institutions attributed 14% of their year-over-year compliance cost increases to COVID-19. The actual percentage could be much higher, given the negative impacts on the compliance process.

Prioritizing Technology and Risk Management

To address these challenges, firms are being advised to invest in technology and risk management solutions. A compliance expert emphasized: “Firms need to prioritize their financial crime compliance operations and invest in the right tools and expertise to stay ahead of the curve.”

Implementing Robust KYC Procedures

The study also highlighted the need for financial institutions to implement robust KYC procedures and customer due diligence processes to mitigate the risks associated with increased alert volumes.

Conclusion

Overall, the study highlights the importance of effective financial crime compliance operations in mitigating the risks associated with financial transactions. With the growing workload and increasing costs, firms must prioritize their compliance efforts to stay ahead of the curve.