Nearly 50% of financial firms across Europe, the Middle East and Africa (Emea) seek clearer anti-money laundering (AML) regulations for improved effectiveness, according to a report.
Additionally, the report by PwC has revealed that financial firms are grappling with challenges including regulatory uniformity, talent acquisition, data management and rising operational costs, which have surged by 14% over the past two years.
Despite the digital push, 35% of respondents see skilled staff as vital for effective AML compliance, hindering digital tool adoption that could boost the detection of suspicious activities.
FCA warns custodians over AML failings
According to the report, a key concern is regulatory inconsistency across jurisdictions, cited by nearly 20% of respondents, leading to uncertainty in relationships and transactions. The EU’s new AML Package aims to address these concerns in the coming years, estimated the researchers.
While 63% are confident in their transaction monitoring, 55% believe system maturity limits new technology adoption. The report found that the investment focus is on improving compliance controls, with 36% prioritising transaction monitoring.
Over half (55%) plan to allocate more than 10% of their AML budget to digital tools. Emerging markets in the Middle East (96%) and Africa (86%) lead in digital investment, while 13% in Belgium, the Netherlands and Luxembourg regions have no digital investment plans – the highest among all regions studied.
AI adoption is on the rise, with 93% in the Middle East, 93% in Africa, and 94% in the Nordics keen on implementing it. Transaction monitoring (79%) and screening (59%) are the top AML areas for AI use.
Regulation: How realistic are the latest AML proposals for cross-border funds?
Michael Weis, anti-financial crime leader at PwC Luxembourg and co-chairman of the editorial board, commented: “We welcome today the European Parliament’s vote on the EU’s AML package which will address those concerns by helping to create a more harmonised regulatory environment across borders and industries and address some of the operational challenges faced by firms.”
Speaking at the launch of the report, Marilin Pikaro, director of the innovation, conduct and consumers department at the European Banking Authority, commented: “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.”
