United States

Amidst Regulatory Uncertainty, Banks Expect Anti-Money Laundering Budgets to Rise

RSM survey finds banks are reevaluating budgets to cope with evolving risk environment



RSM US LLP – the nation’s leading provider of audit, tax and consulting services to the middle market – today announced results from its Anti-Money Laundering (AML) Survey, that finds commercial banks expect to increase AML department budgets, reflecting increased regulatory scrutiny and enforcement. The survey showed that although AML budgets are currently stable, with the median annual operating budget for compliance at $200,000, many expect them to rise by a median of 10 percent. With constant risks linked to criminal activity and terrorist groups, the survey demonstrates AML processes that were sufficient in the past might not be as effective today, and compliance will continue to be a complex and imperative initiative.

Representing the AML departments of more than 100 U.S.-based commercial banks with $500 million to $20 billion in assets, the survey was created to support institutions in benchmarking best practices and opportunities in this ever-changing regulatory environment.

“With the threat landscape changing on practically a daily basis, it is critical for banks to benchmark their AML efforts against their peers and identify areas of enhancement,” said Patricio Perez, partner and Southeast financial institutions leader with RSM. “By gaining a better understanding of how other banks of similar size, complexity and risk are managing AML challenges, we believe institutions will now be able to keep their own programs relevant and address rapid changes in stride.”

Additionally, reported pressures including insufficient staffing levels, time constraints, a changing AML environment and differing compliance strategies could provide opportunities for banks that invest in new ways to enhance current practices. Several other trends identified in the survey include:

  • Reliance on Outsourcing: Many institutions leverage outside resources to ease the AML compliance burden, with a majority of survey respondents outsourcing BSA/AML internal audits (62 percent) and AML model validation testing (53 percent) to ensure that the practitioners have the requisite skills to complete these assessments.
  • Need for Efficiency: While effectiveness is the main objective of the AML function, both in terms of regulatory compliance and risk mitigation, BSA/AML activities are time-consuming.
  • Additional Training: Awareness is a key regulatory requirement, but while web-based training is prevalent, in-person training and training budgets may need more attention.
  • Limited Staffing: AML staffing is generally limited, with more than 70 percent of respondents indicating they have five or fewer full-time employees responsible for AML. Further, the majority of small banks have less than half the number of full-time employees dedicated to BSA/AML compliance compared to large banks, indicating a significant disparity between staffing at smaller and large institutions.

The AML compliance environment is ever-evolving, and banks will need to continuously improve their BSA/AML programs to address these changes. Benchmarking is a critical exercise and can provide banks of all sizes with the knowledge they need to understand competition and nimbly evolve in this fluid and complex environment.

About the 2017 Anti-Money Laundering Survey
The survey represents the perspectives of 132 qualified respondents from U.S.-based commercial banks with $500 million to $20 billion in assets. Participation in the study was limited to senior-level officers and managers responsible for oversight of the BSA program at their respective institutions. In addition to providing data that enables institutions to better evaluate the performance of their AML departments against their peers, the survey covers AML functional structure, staffing levels and certifications, costs, risk tolerance, performance of key compliance processes and technology and training.

To download and read the AML Survey, visit here.

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RSM US LLP is the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with 51,000 people across 123 countries. For more information, visit rsmus.com, like us on Facebook, follow us on Twitter and/or connect with us on LinkedIn.