AML and OFAC Compliance Straining Banks’ Budgets, Study Finds

The cost of compliance with AML and OFAC requirements has been rising to the point that few institutions in a new study said their compliance budgets were adequate.

Banks are devoting more resources to Anti-Money Laundering (AML) and Office of Foreign Assets Control (OFAC) compliance, but many institutions still say they’re compliance budget is insufficient for these tasks, according to a new global compliance survey by Veris Consulting. Nearly 66% of the survey’s respondents said that their AML and OFAC compliance budgets have increased over the last three years.

However, 32% reported that their budgets for AML and OFAC compliance were either inadequate or severely inadequate. Only 8% of the respondents said that they were devoting enough resources to AML and OFAC compliance.

Many of the nearly 300 senior compliance executives involved in the survey reported increased scrutiny from their Board of Directors concerning AML and OFAC compliance: 61% of them said they’re board has become more involved in this area of compliance in the last three years.

The uptick in budgets and board involvement has gone hand-in-hand with an increase in staff devoted to AML and OFAC compliance. 61% of the respondents acknowledged allotting more staff to this area.

The largest driver of increased budget needs for AML and OFAC compliance has been the investment in automated transaction monitoring systems. The survey found that 75% of the executives said that these systems were a key challenge for their institution. Veris added that anecdotal evidence collected during the survey indicated that the analysis of the data was a major part of the cost associated with these systems.

And the survey found that many of the institutions represented in the survey expect further increases in the compliance costs associated with AML and OFAC. In particular 78% of the respondents said they expect their budget to be impacted by compliance with the new FATCA regulations.

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio