A new report reviewing financial crime and its evolving risk to the FS sector has been published by LexisNexis Risk Solutions and the British Bankers’ Association.

A greater regulatory burden, increased personal liabilities on compliance professionals, barriers to greater collaboration and changing criminal methodologies were identified as the most significant barriers to banks’ ability to combat financial crime.

The Future Financial Crime Risks report revealed that while some of Britain’s major banks were spending as much as £660 million each year on AML compliance, both banks and law enforcement agencies had concerns over the changing face of financial crime and their ability to effectively combat emerging risks.

The LexisNexis Risk Solutions team interviewed 200 senior-level financial crime and AML compliance professionals for the study. Although the regulatory landscape is becoming more complex, the survey revealed doubts over the effectiveness of the Fourth EU AML Directive, with a third of respondents claiming that it would have no effect or even increase levels of money laundering across Europe.

The report also highlighted concerns about a shortage of AML compliance professionals in the UK. Increasing levels of personal liability were expected to exacerbate this gap, as half of the compliance professionals said that the forthcoming Senior Managers Regime would make their jobs more stressful, and 54 per cent said it would lead them to choose another career path if they had the opportunity.

When looking at future risks, the research found that 44 per cent of respondents felt that evolving criminal methodologies were the biggest emerging financial crime risk to their business in the next year, followed by a lack of personnel in their risk function (13 per cent). Over the next two years, preventing cyber crime would be the single biggest area of investment for 37 per cent of respondents, particularly fraud (23 per cent) and AML (20 per cent). The expansion of online and mobile banking (and particularly virtual currencies) were revealed to be the most significant challenges banks were set to face when fighting financial crime.

“British banks are on the front line in the battle against financial crime. Both the nature of their business and regulatory design has positioned them as the first line of defence against money laundering, terrorism funding and an expanding array of other illicit activities,” explained Chrisol Correia, director of global AML compliance at LexisNexis Risk Solutions. “To combat financial crime, banks and law enforcement must work together to understand the future risks to adopt a proactive, rather than a reactive approach. If we can understand the risks of the future, we can perhaps prevent them from materialising.”

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