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Over $5bn spent on financial crime reporting

by Reporter8 minute read

An analytics platform has revealed the monetary impact of financial crime reporting in Australia.

A study released by LexisNexis Risk Solutions entitled The True Cost of Financial Crime Compliance Study – Asia Pacific has revealed that financial crime compliance costs increased for 98 per cent of financial institutions in 2023.

The study collected responses from 271 senior decision-makers in charge of financial crime compliance at financial institutions across the Asia Pacific.

It aimed to shed light on the key pain points relating to the cost, current state, and challenges presented by financial crime compliance operations.

In Australia alone, the annual true cost for financial crime compliance costs amounted to $5.37 billion.

According to the study, when asked about the types of financial crimes observed, financial institutions had seen significant increases of more than 20 per cent in the past 12 months.

Financial crimes involving cryptocurrencies were identified for 23 per cent of financial institutions, while a further 23 per cent reported increased use of AI.

Global head of financial crime compliance at LexisNexis Risk Solutions, Matt Michaud, said the cost of financial crime compliance is “clearly rising” for financial institutions across APAC, which is “being felt by teams across the compliance workflow”.

“Skilled in-house compliance teams are essential, but businesses should be actively seeking ways to reduce labour costs while improving compliance efficiency,” Michaud said.

“Criminals adapt quickly and financial institutions require a partner with advanced tools, data and analytics to not only keep pace but to stay ahead.”

ASIC drops the hammer on scam websites

This study came as the Australian Securities and Investment Commission (ASIC) revealed it had taken down nearly 3,500 investment scam websites over the last seven months.

The regulator’s capabilities were bolstered through the government’s Fighting Scams initiative to disrupt scams and protect Australians from any further financial harm back in July 2023.

According to the regulator, Australians have become increasingly vulnerable to financial scams due to cost-of-living pressures.

However, it suggested that because it had removed nearly 3,500 investment scam websites over the last seven months, it had reduced and prevented consumer harm by halting “digitally enabled misconduct”.

ASIC chair Joe Longo stated at the time that cost-of-living pressures have resulted in more Australians seeking ways to make ends meet, with scammers jumping at the opportunity to take advantage.

“That’s why ASIC is stopping investment scams at the source of their promotion, removing them from the internet before they can lure in unsuspecting consumers,” Longo said.

[RELATED: ASIC takes down thousands of scam websites]

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