As the coronavirus pandemic approaches one year in duration, a new survey finds that financial institutions have faced myriad challenges and cost increases related to maintaining effective financial crime compliance.
The survey, “Impacts of the Global Pandemic on Financial Crime Compliance,” conducted by LexisNexis Risk Solutions, polled 150 decision-makers in the United States and Canada who oversee financial crime compliance processes. Among the firms surveyed included banks, investment firms, asset management firms, and insurance firms.
According to the survey’s findings, the top three issues compliance departments within financial institutions have experienced during the COVID-19 pandemic are difficulty accessing information sources for know your customer (KYC) due diligence, cited by 42 percent of respondents; navigating challenges tied to delayed onboarding of new accounts (41 percent); and experiencing longer times to complete due diligence for onboarding new accounts (38 percent).
The survey also found remote working requirements are negatively impacting the effectiveness and efficiency of key compliance activities. Most compliance professionals highlighted each of the following as specific problem areas: customer risk profiling, sanctions screening, KYC for account onboarding, and efficient resolution of alerts.
The coronavirus pandemic is expected to continue to drive increased compliance costs within all sized financial institutions, cited by 79 percent of survey respondents. Sixty-eight percent said increased spend will be allocated toward technology resources, while 32 percent said it will be allocated on labor resources.
However, cost allocation varied by size. The greatest cost factor for large financial institutions is technology-related costs, for example, while labor costs seem to impact smaller financial institutions the most, LexisNexis Risk Solutions noted.
Compliance message: “The events of 2020 have been unprecedented and financial institutions must prepare for increased risk of financial crime for the foreseeable future,” said Leslie Bailey, senior director of financial crime compliance strategy for LexisNexis Risk Solutions, in a press release. “Compliance teams can optimize resources to better navigate the new normal brought by the pandemic while maintaining the customer experience with a multi-faceted approach that includes efficient technology, intuitive analytics and extensive global risk intelligence.”