UK FSIs spend £374k yearly on preventing financial crime

Financial crime prevention costs UK financial institutions on average £374,000 a year, according to new research.

A DWF study, which surveyed 300 financial crime decision makers working in the UK financial services sector, found that on average, organisations spent £53 annually on financial crime defence for each customer relationship they have.

Moreover, they refused an average of £90,240.77 and exited an average of £90,869.52 worth of UK customer relationships for financial crime reasons during the last 12 months.

"Responses to the survey indicated that firms with a revenue of around £10m per year are likely to spend in the region of 1.72 per cent of total revenue on financial crime prevention and deterrence,” said Andrew Jacobs, head of regulatory consulting at DWF. “Larger firms are typically spending less than 1 per cent of total revenue to fight financial crime, particularly those with revenue of £50 million or greater.”

Jacobs added: “As a cross-section of the financial services sector, this tells us that proportionately, smaller firms are spending a greater share of their turnover on financial crime prevention.”

Conversely, he said, firms with greater revenue of £10 million plus are spending most of their financial crime spend on human resources, with over 32 per cent of annual spend being on Financial Crime roles. While for firms with a turnover up to £500,000, money spent on financial crime roles never exceeds 27 per cent of total annual financial crime prevention spend.

The financial crime decision makers cited that employee resources in financial crime roles cost their firms an average of £180,000 per year.

At the end of their respective reporting periods, respondents said there were an average of nine full-time employed UK staff within their firm performing financial crime roles, spending an average of 46 hours of employee time per week monitoring transaction alerts and reviewing screening alerts.

Analysis also showed that every additional 10 hours spent weekly on monitoring transactions and reviewing alerts, result in an additional 1.5 Suspicious Activity Reports (SARs) raised internally.

Respondents highlighted that over the past 12 months, £76,000 was spent on financial crime prevention technology, per firm. They also said they expect their firms to spend around £800,000 on crime prevention technology in the next five years.

According to the research, 82 per cent of firms are using an automated system to screen clients and 84 per cent are employing transaction-monitoring software for Anti-Money laundering (AML) and sanctions detection.

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