As much as three-quarters (72 per cent) of regulated companies feel overwhelmed by current anti-financial crime compliance demands; according to the latest study by digital compliance and anti-money laundering (AML) solution provider SmartSearch.
In the study, ‘The Compliance Forecast‘, SmartSearch reveals that while regulations play a critical role in combating increasingly sophisticated criminal activity, many businesses are finding it challenging to navigate the growing complexity. As regulatory demands expand, surveyed firms report difficulty managing compliance effectively, due in part to a reluctance to embrace digital solutions.
Financial crime costs the UK around £100billion a year, leading to real-world problems such as human trafficking, money laundering, and sale of drugs. In response to this, regulations are becoming increasingly complex, with SmartSearch finding that this has left 73 per cent of businesses concerned about their ability to remain compliant, while 30 per cent have significant fears about the coming year.
With new regulatory complexities seemingly around the corner at every turn, around 76 per cent of organisations feel that regulatory changes are hindering expansion, while over one in ten (13 per cent) feel compliance obligations have damaged customer relations.
This comes in part due to the fact that compliance costs have risen sharply, with 74 per cent of businesses experiencing financial strain over the past three years. Nearly a third of respondents now see expenses relating to compliance as a barrier to profitability – a key issue leading to negative economic consequences.
Making compliance a ‘strategic advantage’
While around 31 per cent of businesses listed financial crime as a key factor hindering the UK’s economic growth, highlighting the importance of regulations, growing concerns around growth suggest it may be necessary to look at current frameworks to ensure that they strike a balance between protection and growth.
Phil Cotter, CEO at SmartSearch, comments: “The Compliance Forecast offers us an outlook on the substantial challenges regulated businesses face in an increasingly complex landscape. With financial crime costing the UK up to £100billion a year, strong regulation is essential. But, as it becomes increasingly complex in order to keep pace with criminals, businesses must respond accordingly to ensure they are able to grow and continue to deliver excellent customer service.
“Adopting a proactive, digital-first strategy offers businesses a streamlined compliance process, reduced costs, and enhanced customer experiences. Organisations that have embraced these solutions are better equipped to navigate evolving regulations and mitigate risks.”
SmartSearch has also outlined some steps to help businesses transform compliance from a burden into a strategic advantage. It explained that there isn’t a one-size-fits-all solution. Tailoring solutions to industry-specific risks enables companies to address their unique regulatory challenges more effectively.
It says businesses should view compliance as an ongoing journey. By integrating digital tools, sector-specific strategies, and collaborative efforts, companies can turn compliance into a core strength that supports sustainable growth while protecting themselves and their customers.
