Costs
Resource
Technology
Customer relationships
Geographical footprint
Risk assessment and management
Sectors
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Key themes
Costs
For every £1 of suspected elicit funds detected, firms spend on average over £2 in detection costs.
This statistic was extrapolated from the insightful data provided by respondents to our report, 'Financial crime and the cost to your business'. This is just one of a number of key metrics and statistics we have been able to identify in our pursuit to bring greater transparency to the true costs of financial crime prevention for firms.
Thinking about the total amount your firm spent on financial crime prevention in the last 12 months, what percentage of this spend can you attribute to the following financial crime typologies?
AML
Fraud
Sanctions
AML
Thinking of the total amount their firm spent on financial crime prevention in the last 12 months, respondents estimate that an average of 18.8% of this was spent on AML.
18.8%
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11%
25%
16%
15%
10%
9%
13%
12%
21%
22%
16%
7%
8%
13%
13%
24%
21%
14%
9%
6%
14%
0%
1 - 10%
11 - 20%
21 - 30%
31 - 40%
51%+
I don’t know
Fraud
17.45%
0%
1 - 10%
11 - 20%
21 - 30%
31 - 40%
51%+
I don’t know
Sanctions
15.97%
Market abuse
15.30%
Market Abuse
15%
23%
19%
16%
7%
5%
15%
Bribery
16%
24%
19%
14%
7%
4%
16%
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While there is an intrinsic connection and correlation between the use of technology in the detection of suspicious activity, our respondents confirmed that there is also a direct correlation between higher identification of financial crime related issues and the number of individuals focussing on financial crime prevention.
It’s a simple finding, but it reinforces what many have long held to be true: if a firm is serious about risk detecting and preventing financial crime, resource needs to be a blend of people and technology; people are still vital in recognising risks through the behaviour of others. Across almost every category of financial crime – identifying high-risk customers, politically exposed persons (PEPs), filing suspicious activity reports (SARs) – there was a correlation between higher activity and higher numbers of financial crime staff.
It is proven that greater human resources within businesses leads to a greater detection of suspicious activity.
Resource
As at the end of the reporting period, respondents said employee resources in financial crime roles cost their firms an average of £179,906.20.
£179,906.20
Cost of employee resource in financial crime roles.
£1-50,000
£50,001 - £100,00
£100,001 - £300,000
£300,001 - £500,000
£500,001+
I don’t know
18%
23%
28%
13%
7%
12%
As at the end of the reporting period, respondents said there were an average of 9.07 full-time UK staff employed within their firm with financial crime roles.
Number of full-time financial crime roles.
Total number of full-time UK staff employed within your firm with financial crime roles.
16%
21%
33%
22%
8%
9.07
1-4
5-8
9-12
13+
I don’t know
As at the end of the reporting period, respondents said employee resources in financial crime roles cost their firms an average of £179,906.20.
Cost of employee resource in financial crime roles in the last 12 months.
30%
25%
20%
15%
10%
5%
0%
£1 -
£50,000
£50,001 -
£100,000
£100.001 - £300,000
£300,001 -
£500,000
£500,001+
I don't know
of employee time is dedicated to monitoring transactions and reviewing screening alerts every week.
45.56 hours
Employee time dedicated each week to monitoring transactions and reviewing screening alerts.
0-20 hours
21-40 hours
41-60 hours
61-80 hours
81-100 hours
101+ hours
18%
23%
28%
13%
7%
12%
An average of
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Technology usage is widespread – with 82% of firms using an automated system to screen clients and 84% employing transaction monitoring software for AML and sanctions.
However, the research also shows that this technology usage does not necessarily improve efficiency. In fact, organisations that use automated systems spend more time reviewing alerts – for every 1,000 customer relationships, they will spend around an additional 49 hours per week monitoring transactions and reviewing screening alerts compared to firms that don’t utilise automation. So does technology increase detection, or increase non-productive work?
Is technology the cure or the cause?
Technology
Financial crime decision makers said that their firm spent an average of £73,600.91 on crime prevention technology in the last 12 months.
£73,600.91
of respondents conduct transaction monitoring for market abuse purposes.
76%
Use of technology.
£1-25,000
£25,001 - £50,000
£50,001 - £100,000
£100,001 - £500,000
£500,001+
I don’t know
25%
27%
22%
9%
3%
14%
Conduct transaction monitoring
for market abuse purpose
Use an automated system(s)
to screen clients
Employ transaction monitoring software for AML and sanctions
Manually monitor transactions
24%
18%
16%
15%
76%
82%
84%
85%
Yes
No
of respondents said their firm employs transaction-monitoring software for AML and Sanctions.
84%
of financial crime decision makers said their firm uses an automated system to screen clients.
82%
of respondents said that their business manually monitors transactions.
85%
Spend on crime prevention technology in the last 12 months.
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For those considering an establishment in a new location this provides an interesting insight, as it confirms that there is a link between the number of locations that an organisation operates across and that not all costs are mitigated through leveraging centralised resource, particularly when it comes to the prevention of financial crime.
On average, an organisation spent an additional £47,287 annually on financial crime defense for each additional jurisdiction they operated in.
Geographical footprint
of respondents have customer relationships that are considered to be high risk in Europe (including EEA & Switzerland).
51%
Percentage of respondents with high risk clients in the following geographical areas.
Europe Including EEA & Switzerland
Middle East & Africa
North America
Other Europe
Central America & Caribbean
South America
Asia
Oceania
None of the above
51%
30%
29%
22%
21%
19%
19%
8%
17%
30%
Middle East & Africa
North America
29%
Other Europe
22%
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We found that the Insurance sector bears the main brunt of court issued restraint orders under the Proceeds of Crime Act (POCA) 2002 and unsurprisingly, Banks & Building Societies made the highest number of SARs to the NCA in the 12 months period that concluded prior to our survey.
Investment and Wealth Managers had the highest average sectoral spend on employee resource to combat financial crime, with on average, over £200,000 per year spent on financial crime prevention roles.
Sectors
Over half (51%) of respondents have customer relationships that are considered to be high risk in Europe (including EEA & Switzerland)
Middle East & Africa
51%
30%
North America
29%
Other Europe
22%
Which sector does your company work in?
Sector
%
Investment/Wealth Management
25.3%
Investment Brokers
4.00%
Asset Manager
9.00%
38.00%
Bank/Building Society
Consumer Lending
5.33%
Payment Services/e-money
5.00%
Insurance
4.00%
Mortgage lenders
1.67%
Advisory
3.00%
Other sector
4.67%
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This figure increases per relationship when it comes to non-UK relationships and the true cost of operating in a different jurisdiction can be eye watering.
What is the true cost of your customer relationships? Financial crime prevention alone is estimated at being over £50 per customer, per year.
Customer relationships
Please provide the total value of customer relationships refused for the following financial crime reasons during the reporting period of the last 12 months.
Respondents refused an average of £90,240.77 worth of UK customer relationships for financial crime reasons during the last 12 months.
£90,240.77
Respondents have an average of
Firms reporting people at high risk.
UK customers
Anti-money laundering
Fraud
High-risk jurisdictions
Sanctions
Market abuse
Other reasons
23%
27%
16%
11%
10%
13%
22%
28%
19%
7%
11%
13%
20%
32%
16%
11%
10%
11%
25%
26%
17%
9%
9%
14%
25%
26%
20%
8%
8%
13%
26%
24%
21%
8%
8%
14%
28%
22%
20%
6%
6%
17%
0
£1-25,000
£25,001 - £50,000
£50,001 - £100,000
£100,001+
I don’t know
Please provide the total value of customer relationships refused for the following financial crime reasons during the reporting period of the last 12 months.
An average of £87,596.17 worth of customer relationships were refused for anti-money laundering.
£87,596.17
An average of £84,586.87 worth of customer relationships were refused for fraud.
£84,586.87
An average of £74,228.16 worth of customer relationships were refused for high-risk jurisdictions.
£74,228.16
customers classified as high risk within their firm.
151.30
Respondents have an average of
Politically Exposed Persons within their firm.
119.01
Firms reporting customers as
high risk
35%
29%
12%
14%
9%
8%
5%
Firms reporting politically exposed persons
33%
26%
11%
12%
7%
8%
14%
0
1-25
26-50
51-100
101-500
501+
I don’t know
Volume of people at risk in a firm
Please provide the total number of customer relationships refused for the following financial crime reasons during the reporting period of the last 12 months.
UK customers
Anti-money laundering
Fraud
High-risk jurisdictions
Sanctions
Market abuse
Other reasons
19%
33%
22%
10%
5%
11%
19%
35%
19%
12%
5%
11%
22%
31%
18%
14%
5%
10%
22%
33%
20%
10%
3%
12%
25%
28%
21%
10%
3%
11%
25%
27%
23%
9%
3%
12%
26%
25%
21%
10%
3%
12%
0
1-25
26-100
101-200
201+
I don’t know
UK financial crime decision makers refused an average of 49.88 customer relationships for fraud during the last 12 months.
49.88
An average of 47.99 UK customer relationships were refused for financial crime reasons.
47.99
An average of 47.77 customer relationships were refused for anti-money laundering.
47.77
An average of 44.17 customer relationships were refused for high-risk jurisdictions.
44.17
Please provide the total number of customer relationships refused for the following financial crime reasons during the reporting period of the last 12 months.
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The vast majority of survey respondents (89%) say they are subject to the FCA’s annual financial crime reporting (REP-CRIM) obligation, while a slightly higher proportion (91%) conduct a financial crime risk assessment.
Of those that conduct a risk assessment, a strong majority (86%) agree that this helps them deploy resources in accordance with their financial crime risk. Only 1% disagree. Our survey respondents were highlighting more instances where funds could be coming from elicit sources as a result of undertaking a business-wide risk assessment, meaning that they were better able to target risks and ultimately de-risk their business.
The smart money is being spent on performing a financial crime risk assessment.
Risk assessment and management
Respondents filed an average of 19.01 SARs under Part 7 of the POCA 2002 within the last 12 months at their firm which were submitted internally to the nominated officer/MLRO within the firm as at the end of the reporting period.
19.01 SARs
What level of SARs did firms report in the last 12 months?
An average of 16.27 SARs were consent requests under s335 POCA 2002
An average of 17.19 SARs were disclosed to the National Crime Agency
Submitted internally to the nominated officer/MLRO within the firm as at the end of the reporting period
12%
25%
19%
12%
8%
14%
10%
Disclosed to the National Crime Agency as at the end of the reporting period
12%
18%
19%
18%
17%
7%
9%
The number of those SARs which were consent requests under s.335 POCA 2002
14%
20%
21%
15%
13%
8%
9%
0
1 - 10
11 - 20
21 - 30
31 - 40
41+
I don’t know
0
1-30
31-60
61-90
91-120
121+
I don't know
9%
21%
16%
17%
12%
12%
12%
were disclosed to the National Crime Agency under the Terrorism Act 2000 during the last 12 months.
An average of
58.83 SARs
Number of SARs disclosed to the National Crime Agency under the Terrorism Act 2000 in the last 12 months?
of respondents said that their firm carries out a financial crime risk assessment.
91%
What percentage of firms carry out a financial crime risk assessment?
Percentage of firms that carry out a financial crime risk assessment
9%
91%
said that their firm do not carry this out.
9%
of those firms who carry out a financial crime risk assessment agree that the assessment has been effective in helping to deploy resources in accordance with its financial crime risk. 47% strongly agree. 39% somewhat agree. While only 1% disagree.
86%
How effective is the financial crime risk assessment in helping firms deploy resources?
12%
1%
2%
47%
39%
Strongly agree
Somewhat Agree
Neither agree nor disagree
Strongly disagree
Somewhat disagree
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