Herald - Issue 411

Page 52 • The HERALD • 26th August 2021 v SUPPORT YOUR LOCAL SPECIALISTS v ASK A PROFESSIONAL UK Financial Institutions Spend an Average of £374K Each Year on Preventing Financial Crime Financial crime prevention costs UK financial institutions an average of £374k every year, according to new research from the global legal business, DWF. The survey of 300 nancial crime decision makers working in the financial services sector in the UK, also found that on average, organisations spent £53 annually on nancial 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. Andrew Jacobs, head of regulatory consulting at DWF, said: “ 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% of total revenue on financial crime prevention and deterrence. Larger firms are typically spending less than 1% of total revenue to fight financial crime, particularly those with revenue of £50m or greater. 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, firms with greater revenue (£10M plus) are clearly spending most of their financial crime spend on human resources, with over 32% of annual spend being on Financial Crime roles, compared to those firms with a turnover up to £500,000 for whom Financial Crime roles never exceeds 27% of total annual financial crime prevention spend. This figure and our wider analysis shows us that Human Resources continue to be one of the most effective ways of detecting human behaviour linked to Financial Crime activity. In a climate where businesses are being held to account on their Environmental, Social and Governance approach by investors, clients, employees and society more broadly, it is important for financial services business to make sure that they are considering evolving parameters, so that governance is robust and their control framework remains alive to new risks.” The financial crime decision makers cited that employee resources in nancial 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 sta within their rm performing nancial 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. Technology is key to increasing nancial crime detection and prevention – but it is also a signi cant factor in driving up costs and staff workload. Respondents highlighted that over the last 12 months, £76,000 was spent on nancial crime prevention technology, per rm. ey also stated that they expect their rms will spend around £800,000 on crime prevention technology in the next ve years. Technology usage is widespread – with 82% of rms using an automated system to screen clients and 84% employing transaction-monitoring so ware for Anti-Money laundering (AML) and sanctions detection. “Just as dedicating more staff to financial crime boosts results, so too does the use of technology. However, our analysis has Continued on page 53