The news: Sanctions compliance, money laundering crackdowns, and technology regulations are on the minds of financial executives for 2023, according to ComplyAdvantage’s annual report, The State of Financial Crime.
The report surveyed 800 C-suite and senior compliance decision-makers in the US, Canada, UK, French, Germany, Netherlands, Singapore, Hong Kong, and Australia.
Economic uncertainty is changing attitudes toward risk: Geopolitical tensions, a cost-of-living crisis, and a looming recession are just a few of the reasons behind financial heads doubling down on their risk mitigation efforts in 2023.
- 99% of respondents said that they are re-evaluating their risk appetite due to the uncertain economic environment.
- More than half (59%) said they are preparing for a dramatic increase in financial crime, and a similar percentage (58%) said they will be hiring additional risk personnel to assist with compliance.
A defining moment for sanctions compliance: The conflict in Ukraine has put the use of sanctions at the forefront of many global financial institutions' priorities.
- 46% of those surveyed said Russia is the geopolitical hotspot their firm is most concerned about.
- 53% of respondents said their firm changed their business model due to the war in Ukraine.
- 50% said they implemented a freeze on Russian assets.
- 44% said they shut down their onboarding processes in Russia.
The implementation of sanctions compliance processes will lead the way for responding to similar future crises. Mounting concerns around an Iran nuclear deal, increased missile tests in North Korea, and political tensions in China might result in the need for stronger sanctions compliance, and banks must be prepared to implement related changes quickly.