FinTechs are not prepared to accept shortcomings in the fight against financial crime, new figures from LexisNexis Risk Solutions have revealed.

Almost half (48 per cent) of UK based FinTech companies don’t think the existing UK regulatory framework is effective in combatting financial crime in the UK, with 12 per cent going so far as to say that it is not at all effective.

LexisNexis Risk Solutions worked with The Economist Intelligence Unit to survey 296 senior compliance and finance executives from a range of regulated businesses, 61 of which were from FinTech firms.

FinTechs believe advanced analytics and emerging technologies are the most effective way to improve the fight against money laundering in the UK - 46 per cent compared with 32 per cent overall. They’re far more likely to be using analytics for Anti-Money Laundering (AML) than other regulated businesses: 86 per cent of FinTechs are using analytics already or planning to within the next couple of years, compared with 78 per cent overall.

When asked about what concerns them most in relation to money laundering over the next 12 months, a quarter of FinTechs cited evolving criminal methodologies, such as the use of cryptocurrencies, as the largest risk. They see geopolitical events like Brexit (16 per cent) and a lack of awareness of the threat of money laundering (16 per cent) as the second biggest risks.

Over half (53 per cent) of FinTechs view the lack of information sharing between regulated industries as the biggest external barrier to effective AML controls, with an additional 49 per cent stating that lack of consistency towards AML across different sectors was a significant obstacle.

But while FinTechs have the appetite to combat money laundering, they also face internal challenges. The report found that 38 per cent felt that company culture needed to shift from apathy to actively tackling the issue, while almost half (48 per cent) stated that there is an internal lack of understanding of money laundering typologies within their organisation.

Michael Harris, director for financial crime compliance and reputational risk at LexisNexis Risk Solutions, commented: “With their agile approach to business, good understanding of technology and being unencumbered by legacy systems, FinTechs are in a strong position to take the lead in actively detecting and fighting money laundering within the UK economy.

"However, there are some internal challenges to overcome - recruiting talent with the right skill set can be difficult, as FinTechs compete with banks with bigger budgets - there also needs to be an internal culture shift towards understanding the AML threat better and tackling complacency."

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