Spending on anti-money laundering initiatives on the rise

To fight against global money-laundering, governments and regulatory bodies have been introducing increasingly stringent anti-money laundering (AML) regulations. According to a new forecast report from WealtInsight, global AML spending has grown from USD 3.6 billion in 2008 to USD 5.3 billion in 2012, at a Compounded Annual Growth Rate (CAGR) of 10.18 percent. This trend is set to continue increase to reach USD 8.2 billion in 2017.

Recent developments in global AML regulation include the launch of new Financial Action Task Force (FATF) money laundering recommendations in 2012, the Foreign Account Tax Compliance Act (FATCA) in the US and proposals for the Fourth Money Laundering Directive by the European Commission (EC) in 2013. These initiatives are aimed at strengthening the global AML regulatory environment and increase pressure on financial institutions to comply.

WealtInsight predicts that spending on operational compliance (such as training employees, analysing customer data and reporting to authorities) is expected to grow from USD 4.4 billion in 2013 to USD 6.2 billion in 2017, at a CAGR of 8.89 percent. Technology spending is expected to grow from USD 1.4 billion in 2013 to USD 2.0 billion in 2017, at a CAGR of 8.78 percent.

While AML compliance in North America and Europe is highly developed, it is yet to reach these standards in a number of emerging economies in the Asia-Pacific, Middle East and Latin America. Many countries in these regions have formulated AML regulations in the past, but effective enforcement by local regulators has been the key challenge. However, governments and regulatory bodies in these nations have demonstrated their interest in bringing their AML compliance in line with international standards.