Almost half of financial firms believe that current anti-money laundering regulations are insufficiently clear or do not address many of the practicalities of modern operations.
PwC’s EMEA AML Survey 2024 found that many firms – especially banks – across the region have concerns about the workability of both current and upcoming AML regulations.
The report covered hundreds of financial institutions in 40 countries across Europe, the Middle East and Africa. It sheds light on how banks, asset managers, and payment institutions are tackling AML risks, their perspectives on the regulatory environment and future-proofing the financial system.
In the face of increasing regulations and regulators’ growing scrutiny and focus on AML effectiveness, financial firms said the biggest challenges are lack of regulatory uniformity, finding skilled AML staff, data management, updating know-your-customer (KYC) documentation, automating processes, and operational costs, which have increased by 14% over the past two years.
Having skilled staff is seen as the most important factor for effective AML compliance. For 35% of respondents, this staff-related challenge is also hindering AML teams’ ambitions to implement digital tools which would have otherwise improved their effectiveness by better detecting suspicious activities.
The most common regulatory concern is a lack of uniformity and application across jurisdictions and industries, with nearly one fifth of respondents claiming this results in ambiguity when it comes to entering relationships and transactions. Within the EU, such concerns will likely be alleviated moving forward as the new AML Package gets rolled out in the coming years.
Almost two-thirds are fully confident that their transaction monitoring approach is fit-for-purpose, although 55% say that the maturity of their systems is an impediment to implementing new technologies.
The main driver behind AML investments is to increase the effectiveness of compliance controls, cited by 36% of respondents, with transaction monitoring being the top AML topic to prioritise.
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“AML frameworks, policies and actions will be a cornerstone of any financial centre that wishes to be seen as a trusted financial hub,” said Imran Farooqi, EMEA anti-financial crime leader at PwC United Kingdom and co-chairman of the editorial board.
“Regulatory frameworks have matured considerably over the last decade, however criminals have also been shown to adapt quickly. This landmark PwC survey provides invaluable insights into how firms have responded to recent regulatory and technological shifts.
“While the financial sector is demonstrably rising to the occasion and taking AML seriously, our research also captures the significant challenges firms still face. By understanding these challenges, policymakers and industry can better work together to build a more robust and future-proof AML ecosystem.”
Marilin Pikaro, director of the innovation, conduct and consumers department at the European Banking Authority (EBA) added: “Sound AML/CFT governance arrangements, appropriate risk assessment practices, awareness of staff members and timely reporting processes are key to prevent and fight money laundering and terrorist financing (ML/TF).
“The European Banking Authority’s role as defined by its legal mandate is to lead, coordinate and monitor the EU financial sector’s fight against ML/TF across the EU.”