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TBML tops list of increased exposures to financial crimes by Australian financial institutions

By Mark Ford on July 11, 2022

Australian financial institutions have reported increased exposure to trade-based money laundering (TBML) and supply chain corruption amongst various other financial crimes over the past 18-24 months according to the latest LexisNexis True Cost of Compliance Study – Australia.

The firms also reported increased vulnerability to risks associated with professional advisors, proceeds of trafficking and criminal use of new technologies and methods, including cryptocurrency according to the study.

It shows that the average annual cost of compliance for mid-sized and large Australian financial institutions has risen to US$19.2m, one of the highest levels in the Asia Pacific (APAC) region, and concludes that the cost of financial crime compliance for financial firms in Australia will reach US$2.54 billion in 2022.

Increased TBML exposure

The study of 50 Australian financial firms is part of a wider survey of 253 institutions across the APAC region in which respondents ranked TBML top of the list of emerging financial crime risks (Trade-based Financial Crime, 17 June 2020).

Of Australian respondents, 85 per cent said their firm’s exposure to TBML had increased over the past 18-24 months, ahead of increased exposures to the use of money mule accounts (82 per cent) and financial crime involving digital payments (81 per cent).

Beneficial ownership and KYC

Financial institutions in Australia say that identification of ultimate beneficial owners, combined with the complexity of know your customer (KYC) business data are their most significant challenges.

While the new requirement for all directors in Australia to have a director ID number has helped with due diligence, respondents said the lack of a central repository for beneficial ownership information within Australia remains a hurdle to effective checks.

More information about the LexisNexis True Cost of Compliance Study – Australia and the LexisNexis True Cost of Compliance Study Asia-Pacific Edition can be found here, alongside comparable studies for China, India, Malaysia and Japan, where these reports can be downloaded.