Financial institutions are struggling with cryptocurrency and AI-based fraud.

Financial institutions across the U.S. and Canada are facing unprecedented challenges as compliance costs soar to $61 billion, according to a recent report. Investigating the Real Cost of Financial Crime Compliance released by LexisNexis Risk Solutions.

that much studyimplementer Forrester ConsultingIt paints a worrying picture of increasing financial strain on institutions amid increasing regulatory pressure and the emergence of sophisticated criminal methodologies.

According to research 99% of financial institutions have experienced a surge in compliance costs.In particular, mid- to large-sized institutions with assets exceeding $10 billion are feeling the burden. A key driver of these cost increases is the rapid increase in financial crime regulations and regulatory expectations, cited by 44% of institutions. To navigate this challenging environment, 70% of organizations are prioritizing cost reduction. Within the next 12 months.

One of the most pressing challenges facing financial institutions is the rapidly increasing review workload as the sanctions environment becomes increasingly complex. Surprisingly, 83% of medium to large organizations and 87% of small organizations reported this. Increased screening notificationsIt highlights the growing pressure on compliance teams.

Technology costs are a significant driver of cost increases. 79% of organizations have seen costs related to compliance and know-your-customer (KYC) software increase in the past year. Additionally, 75% of businesses have seen a surge in costs related to networks, systems and remote working, highlighting the significant investments required to meet stringent compliance requirements.

Additionally, this study Cryptocurrency, digital payments, and AI technology as tools for illegal activities. surprisingly, Reported by 22% of institutions While financial crimes involving cryptocurrencies have increased significantly, the same percentage has seen an increased use of AI in criminal activities.

In response to these challenges, Matt Michaud, Global Head of Financial Crime Compliance at LexisNexis Risk Solutions, emphasized the importance of a strategic approach to financial crime compliance.

Michaud emphasized that organizations must actively look for ways to increase compliance efficiency while reducing labor costs. This includes providing agencies with comprehensive data sets, advanced AI/ML-based compliance models, and powerful analytics capabilities to quickly identify new crime patterns.

The study also explores ways to combat financial crime, including balancing compliance efficiency with customer experience, embracing new technologies to combat emerging financial crimes, and using compliance tools and analytics to manage costs and improve efficiency. Provides recommendations.

Striking the right balance between compliance and customer experience is critical in the digital age as institutions compete to provide seamless onboarding and transaction experiences while mitigating financial crime risks.

As financial institutions grapple with the twin challenges of rising compliance costs and evolving criminal methodologies, proactive and strategic investments in technology and expertise are needed to navigate the complex regulatory landscape and protect against financial crime threats. is essential.

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