The rising cost of AML: How AI can help

The latest Napier AI / AML Index 2025-2026 reveals that compliance costs are rising faster than money laundering losses, even in markets that have seen reductions in illicit finance.

While the global average compliance cost increase is 5%, major financial hubs are seeing far higher figures. The UK recorded a 15% rise, the US reached 12%, and Singapore and Australia climbed to 9%.

In several countries, including France and Germany, the cost of compliance is more than double the rate of estimated money laundering growth. The widening gap is prompting financial institutions to question why the burden continues to escalate.

Napier AI, an AI-powered AML platform, recently delved into the challenges in sanctions and screening.

One major driver is sanctions inflation and the escalating pace of change, it said. Sanctions lists now update multiple times a day, far outpacing the slower, consultative processes seen in AML transaction monitoring. At the same time, the digitisation of corporate filings is accelerating changes to beneficial ownership. In the year ending March 2024, Companies House processed 14.3m filings—13.1m submitted digitally—creating more opportunities for bad actors to obscure corporate structures.

Screening for politically exposed persons (PEPs) and relatively close associates (RCAs) adds further complexity. These individuals may not appear on official watchlists but still pose significant risk depending on a firm’s risk appetite. Overly conservative or globally uniform screening settings can also generate unnecessary friction, leading to unintended blockages in markets where certain individuals or entities are not sanctioned.

Geopolitical volatility and regulatory divergence further complicate operations. Jurisdictions emerging from conflict often lack reliable data to inform risk assessments, while financial institutions managing cross-border flows must navigate multiple, sometimes conflicting, regulatory expectations.

Against this backdrop, artificial intelligence is becoming a critical tool. AI supports secondary scoring to reduce false positives, assists in regulatory research, and analyses complex edge cases by linking disparate data points. It can even recommend new rules based on analyst behaviour and enable synthetic data generation to support safer intelligence sharing. As compliance pressures rise, AI offers a path to greater accuracy, efficiency and resilience.

For more insights, read the full story here.