Increasingly complex compliance regimes are causing much disquiet in the business community, report state…

Increasingly complex compliance regimes are causing much disquiet in the business community, report states.

Detailed data released on Friday (17 January) by SmartSearch, the Leeds-headquartered anti-money laundering solutions provider, reveals that a mammoth 72% of regulated companies feel overwhelmed by the continual demands of anti-financial crime compliance.

It is widely accepted that financial crime, which costs the UK approximately GBP 100 billion annually, has far-reaching and often catastrophic consequences, including human trafficking, money laundering and the illegal drugs trade, and that regulators across various industries have intensified their efforts to address these issues in response as they strive to match the sophistication of their criminal nemeses. However, while the findings from SmartSearch’s The Compliance Forecast indicate that regulation plays a key role in combating these crimes, they also show that businesses are struggling to stay on top of the growing complexity of compliance.

ACCOUNTANCY AND FINANCIAL SERVICES

Examining responses from more than 600 senior decision-makers working in the UK’s finance, property, legal and accountancy sectors, the study focuses on five critical areas: crime, confidence, challenges, complexity and cost, with 73% of respondents concerned about their ability to remain compliant against the backdrop of increasingly onerous regulatory regimes – strongly indicating that the fight against financial crime is proving overwhelming for many organisations. High-risk industries, such as accountancy and financial services, are particularly affected, with 75% of businesses in these sectors reporting feeling heavily burdened by compliance demands.

More than three-quarters (76%) of businesses believe that changes in regulations are hindering their ability to expand, with a small but not insignificant 13% of respondents reporting that compliance obligations have strained customer relationships. These compliance challenges are further exacerbated by their increasing complexity, with the vast majority (89%) of businesses describing current regulations as “difficult to navigate” and 68% expecting this complexity to continue escalating over the coming year.

The financial burden of compliance is also a pressing issue, with 74% of businesses reporting that over the past three years they have experienced some strain on their finances which can be linked to the expense of compliance. Moreover, nearly a third of respondents now view compliance-related costs as a barrier to profitability.

CEO COMMENTS

In a statement accompanying the report, SmartSearch CEO Phil Cotter commented: “The Compliance Forecast offers us an outlook on the substantial challenges regulated businesses face in an increasingly complex landscape. With financial crime costing the UK up to GBP 100 billion a year, strong regulation is essential. But, as it becomes increasingly complex in order to keep pace with criminals, businesses must respond accordingly to ensure they are able to grow and continue to deliver excellent customer service.”