Rising cost of stopping financial crime revealed

UK financial institutions spend an average of £374,000 each year on preventing financial crime, according to new research from global legal business DWF.

The survey of 300 financial crime decision makers working in the financial services sector in the UK also found that on average, organisations spent £53 annually on financial 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 (pictured), 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 per cent of total revenue on financial crime prevention and deterrence.

“Larger firms are typically spending less than 1 per cent of total revenue to fight financial crime, particularly those with l 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 ( £10million plus) are clearly spending most of their financial crime spend on human resources, with over 32 per cent 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 per cent 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."