It has been uncovered that European financial institutions could each endure up to £1m in costs in compliance with the impending AML legislation.
Research conducted by compliance and payments expert, Eastnets, reveals an industry grappling with financial pressure, where the European Commission is set to introduce the Anti-Money-Laundering Authority (AMLA) to combat money laundering and terrorism financing.
The Eastnets survey, encompassing over 3,000 IT, risk, and compliance leaders within the sector, found that a staggering 76% of UK respondents anticipate that failing to adapt to the new AML legislation could set their businesses back between £350,000 and £1m. Concurrently, 72% of respondents from the European Union foresaw a similar fiscal impact, estimating costs between €360,000 and €1m.
Furthermore, a significant portion of these costs, as identified by 97% of respondents, will likely emanate from penalties, seizures, and an escalation in training, monitoring, and reporting procedures. A resounding 88% noted the uphill battle against financial fraud and money laundering, which has become increasingly intricate and financially burdensome over the preceding five years, with 38% attributing this to heightened regulatory expectations.
The survey findings reveal a distinct apprehension amongst financial institutions, with 46% identifying a rapidly evolving regulatory environment as one of their paramount challenges in relation to AML and financial fraud. Additionally, the complexity of regulations and legislation was highlighted by another 45%.
Moreover, technology and tools were considered pivotal in facilitating readiness to comply with and cooperate with entities like AMLA. Accordingly, 63% of respondents highlighted regulatory reporting tools, 59% pointed towards third-party data providers, and 55% recognised AI as crucial components.
Eastnets Deputy CEO Deya Innab said, “Keeping up with new regulations is an age-old challenge for financial institutions, but the formation AMLA could bring eye-watering costs. To minimise this, businesses need to consider all the technologies and tools available to them. By doing so, they can minimise costs in the long term while protecting themselves and their customers.”
Keep up with all the latest FinTech news here
Copyright © 2023 FinTech Global
