Increased Regulatory Expectations Are the Greatest Anti-Money Laundering Compliance Challenge

Compliance departments are feeling increasingly challenged by higher regulatory expectations, coupled with staff shortages and technology concerns, according to a joint Dow Jones Risk & Compliance and Association of Certified Anti-Money Laundering Specialists (ACAMS) global survey.

"This year's survey once again highlights the issues and emerging trends that are shaping the financial crime compliance industry," said Joel Lange, managing director of Risk & Compliance, Dow Jones & Company.

"We can see the continuing confusion surrounding changing regulatory expectations and the pressure financial institutions face regarding maintaining some accounts. Both points are important to developing new compliance strategies," adds John Byrne, CAMS, ACAMS executive vice president.

The survey found that increased regulatory expectations are the greatest anti-money laundering compliance challenge, cited by nearly two thirds of those polled worldwide, compared with just over half two years ago.

Nearly half the respondents faced challenges in recruiting and retaining trained staff; a 36% increase on two years ago, while nearly a third of those polled cited outdated technology as a key concern. 

This year's survey saw that 60% of firms have added AML staff over the past 12 months; a 12% increase over the past three years.

Respondents appear slightly more optimistic going forward with regard to availability of qualified staff, improvements in technology, reductions in false positives, or low-precision matches, and the level of senior management engagement. However, they remain concerned about the future impact of additional regulations and increased enforcement.

Nearly three quarters of those surveyed said that FATCA regulations are a factor in increased workloads, while 52% mentioned the impending implementation of the 4th EU Money Laundering Directive; an increase of nearly 24% over the past two years.

More than half of companies said Ukraine-related sanctions, imposed in 2014, have also added to workloads.

Client On-boarding processes already sharpened, adding to workloads

An increasing proportion of organizations (more than 70%) have made, or are considering making, changes to client-on-boarding processes due to new FATCA requirements, with enhanced identity verification the most widespread change reported.

Standardized on-boarding processes and more stringent customer-acceptance standards have increased sharply in the past two years.

More than one-third of those surveyed said their organization has exited a full business line or segment of business in the past 12 months due to perceived regulatory risk, or the organization's inability to manage the risk. 

About 30% of respondents report that their firms are planning to exit, or consider exiting, a business line or segment over the next year.