Firms must relinquish outdated and time-consuming compliance processes in light of tighter budgets and an increasing regulatory burden, SmartSearch has warned.
Collette Allen (pictured), COO of SmartSearch, argued that regulated firms must modernise their approach to compliance, to not only relieve growing regulatory pressures, but maximise available resources.
She highlighted a growing sentiment among regulated firms that they are having to do much more but with less budget.
A report last year from Thomson Reuters found that the majority of financial services firms expected an increase in regulatory activity.
Yet at the same time, respondents reported managing cost pressures and balancing compliance demands as key challenges.
Separate to compliance with anti-money laundering (AML) rules, KPMG’s Regulatory Barometer also revealed increasing scrutiny around ESG, sustainable finance and payment systems.
The barometer showed growing pressures on financial services firms as rules continued to become more ‘UK-centric’ post-Brexit.
Allen said: “There is no question that UK regulated firms continue to face significant pressure.
“Recent findings certainly mirror the feedback we are hearing on the ground – firms are at breaking point as compliance demands only increase, leading to difficulties when it comes to allocating resources effectively and keeping up with the evolving requirements.
“In truth, many firms have been slow to adopt a digital compliance strategy and instead maintain time-consuming and resource-heavy manual checks, particularly in their AML processes.”
She added: “Such checks help drive up the cost of doing business, and in the case of these critical compliance checks, expose the business to a higher risk of financial crime.
“Firms that have integrated technology are able to automate and strengthen what were onerous compliance tasks, such as identity verification, sanction screening and source of funds checks.
“Allowing technology to do much of the heavy lifting helps minimise human error and utilise staff and resources much more effectively.”
