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75 percent of anti-money laundering (AML) professionals believe the current geopolitical landscape presents new risks and challenges for preventing financial crime at their organisations, according to a joint survey by SWIFT and Dow Jones Risk & Compliance.

To address these risks, 54 percent of respondents said they were planning to increase their investment in RegTech in the next three to five years. 59 percent say technology has improved their company’s ability to tackle AML, KYC and sanctions requirements.  

The annual survey – comprised of responses from more than 500 compliance and anti-money laundering professionals around the world – assessed the current regulatory environment and the impact of new regulation on international and regional banks’ compliance departments.

Joel Lange, Managing Director of Dow Jones Risk & Compliance, said: “The shifting geopolitical environment has created an additional layer of complexity for tackling financial crime around the world. As the political and economic landscape continues to impact international trade, data protection and tax cooperation, the need for greater transparency and more effective information sharing across borders is more important than ever.”

As financial crime risks continue to evolve, increased regulatory expectations represent the greatest challenge for the respondents, followed by concerns surrounding increased enforcement of current regulations, and the need to understand regulation outside of their home jurisdiction.

Specific regulations, such as the Office of Foreign Assets Control (OFAC) and EU 50% Rules, as well as the FinCEN CDD Rule (both new in 2017 survey), were cited by over 70 percent of respondents as contributing to increased workloads for compliance departments.

The U.S. Department of Treasury's OFAC issued the 50 Percent Rule which provides guidance on companies dealing with entities owned 50 percent or more in the aggregate by more than one blocked person. The FinCEN (Financial Crimes Enforcement Network)’s Customer Due Diligence Rule provides a customer due diligence framework intended to promote a more level-playing field across and within financial sectors.

More than half of respondents said FATCA and the Fourth EU Money Laundering Directive are regulations that add to existing workloads. The Foreign Account Tax Compliance Act requires foreign entities to report on the foreign assets held by their U.S. account holders or be subject to withholding on withholdable payments. The Fourth EU Money Laundering Directive (AMLD-IV) requires European member states to update their respective money laundering laws and transpose the new requirements into local law by 26 June 2017.

“Technology can play a key role in providing new and enhanced capabilities that strike a balance between preventing criminal activity, meeting regulatory requirements and containing costs,” said Paul Taylor, Director of Compliance Services, SWIFT. “The most sophisticated financial crime compliance solutions help mitigate risks and boost efficiency in several ways, from managing workloads to automating payments monitoring and reducing false positives, enabling compliance teams to focus on more strategic risk policy and financial crime prevention work.”

With de-risking on the rise in Africa, investment in compliance products is becoming increasingly important for African banks. “African banks are aware that their compliance policies and processes are increasingly under scrutiny by their correspondent banks,” said Denis Kruger, Head of sub-Sahara Africa, SWIFT. “Many are already investing in innovative technical solutions to mitigate risk and implement the right compliance policies to protect their business.”

The survey found that the greatest AML-related challenge currently facing organisations is having enough trained staff (57%), followed by the reliance on outdated technology (48%).

Historically, most institutions manage their anti-fraud and AML activities separately; however the data shows an increase (66%) from last year (59%) of AML departments handling fraud detection and prevention. When it comes to managing fraud, risk data (90%) continues to be the most relevant source of information, followed by crime typologies (75%) and news (70%).

Dow Jones is a global provider of news and business information, delivering content to consumers and organizations around the world across multiple formats, including print, digital, mobile and live events.

SWIFT is a global member owned cooperative and the world’s leading provider of secure financial messaging services.