A couple of reports from risk Solutions group LexisNexis assert that anti-money laundering and know-your-customer policies have negative effects on businesses’ customer service significantly. The frivolities of anti-money laundering and know-your-customer inquisition are as of current just beginning to take effect following stricter regulations imposed on cryptocurrencies and cryptocurrency operations by respective regulators. Like any inquisition worth it’s salt, nobody truly expected.
KYC and AML measures may be seen as a necessary evil in the crypto space by many, but that notwithstanding, they are starting to check out crypto and businesses’ utility and efficiency. Sadly, no one seems to admit this openly.
The FATF continues constricting, slowly but surely like a red tape making policy suggestions and devising outlines to make sure they are enforced, while transactions ranging from crypto trading to getting a simple USD money order have become almost impossible for the scope of privacy intrusion they can entail.
There is a quickening happening in recent years, and the squeeze is now starting just to be felt. It is true that this is bad for business. The 2016 LexisNexis report for Asia “the true cost of anti-money laundering compliance,” reads in part “a majority of respondents, 55%, indicated that AML compliance has a negative impact on their fIrms business’ productivity. An additional 15% of the respondents argued that AML compliance actually threatens their firms’ ability to conduct business.”
The group that is seen to be most responsible for this pressure on anti-money laundering policies according to the study is “among compliance organizations, the international Financial action task force, FATF, is seen as having the most influence on compliance operations followed by the original Asia/ pacific group on laundering and APEC counter-terrorism working group.”
The new 2019 outfit of the study for the United States and Canada has also presented a similar picture and has given further details on who gets hit the hardest by centralized force-backed regulatory bodies such as FATF., in the long run, the small businesses are the one who takes the most heat. The study details that “the cost of AML, as a percent of total assets, is higher among smaller firms up to 0.85% as compared to mid or large farms, up to 0.08%.” this is driven by the fact that there are certain overhead investment requirements regardless of the scale of operation.”
Not only is the average annual compliance spending for the United States and Canadian firms higher, according to the 2019 study considering the projected cost of AML compliance across all United States and Canadian financial services firms is USD 31.5 billion, but also these practices can be bad for worker morale and customer on-boarding. The 2016 report continues to read in part “the opportunity costs are seen as highest in China and Thailand were 6% and 26% of respondents, respectively estimated that anti-money laundering compliance leads to the loss of 5-6 percent of account opportunities.”
many potential clients are turned off due to the brute questions and unprofessional presumptions, thereby making them leave during the application or on-boarding processes.