Financial crime compliance: The role of KPIs in measuring success

financial crime compliance

In today’s digital age, regulated businesses in the UK face increasing challenges in combatting financial crimes. With the rise in sophisticated money laundering schemes and fraudulent activities, there’s an urgent need for compliance teams to ensure that financial crime prevention measures are up to scratch and continually evolve in line with new methods of perpetrating fraud and other forms of economic crime. 

By focusing on the right Key Performance Indicators (KPIs), compliance teams can ensure they’re not only meeting regulatory requirements but also providing an efficient, user-friendly experience for their customers.

In this article, we take a look at a series of KPIs that are typically used in financial crime compliance and examine their importance in every compliance programme.

Abandonment rates

In financial services and other regulated businesses, a high abandonment rate can be a sign of a cumbersome verification process. Customers, while understanding the importance of compliance, also prioritise ease and speed. An increase in this KPI might mean that the onboarding or verification process is too lengthy or complex. Compliance teams should view this KPI as an indicator to evaluate ways to streamline processes without compromising on compliance.

Customer onboarding times

The time a compliance team spends per customer onboarding check can also be an insightful KPI. If checks are too quick, it might mean potential issues are being missed. Conversely, if they’re too long, it might signal inefficiencies in the process or a lack of necessary tools. This KPI can guide teams in refining their onboarding processes and deciding where technology could potentially be used to reduce the time it takes to welcome a new customer.

Financial penalties and sanctions

One of the critical KPIs for businesses is the tracking of financial penalties and sanctions. Financial penalties in the context of AML non-compliance can be substantial, sometimes amounting to thousands or even millions of pounds. By closely monitoring this KPI, businesses can gauge the financial impact of their current AML strategies and prioritise resources in areas which may be prone to breaches or lapses that have led to fines or sanctions in the past. 

AML training completion and effectiveness 

Ensuring that your business’ workforce is adequately trained to detect and deter instances of financial crime, fraud, and money laundering is paramount. This makes tracking training completion and effectiveness an important KPI in AML compliance. 

Employees are often the first line of defence against money laundering and other financial crime so ensuring they are able to recognise suspicious activity or red flags, and are well-versed in the proper protocols for reporting and escalation is a significant tool in how your business mitigates risk. Make sure that staff not only complete mandatory training but truly understand and can apply their learnings within their day-to-day roles. 

Implementing new regulations

Keeping track of the time it takes to implement new regulations and adapt AML compliance processes is a key KPI. With regulation evolving and changes being announced regularly, staying compliant increasingly demands agility from firms. Being able to adjust, change, and pivot processes to stay on top of regulatory changes is key. When new regulations are announced, measure how long it takes your firm to adapt existing systems and align processes with new regulatory guidance.

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