As financial crime and regulatory scrutiny continue to rise, organizations are increasing their spending on compliance initiatives, though many remain skeptical about relying solely on AI as a solution. This sentiment comes from a global survey of risk and compliance officers conducted by LSEG Risk Intelligence.
The survey reveals that 87% of participants anticipate an uptick in their organization’s annual budgets for Know Your Customer Enhanced Due Diligence (KYC EDD) in the coming year, with an expected average increase of 5.2%. Currently, the average annual expenditure for Enhanced Due Diligence stands at approximately $632,026—this amount rises to over $900,000 for organizations with revenues exceeding $1 billion. Additionally, 90% of respondents have noted an increase in requests for compliance checks over the last three years.
When it comes to technology in compliance processes, opinions vary regarding the role of AI. While 58% of respondents advocate for KYC EDD to remain primarily or entirely human-driven, 42% support more automation through AI.
Daniel Hartnett, head of enhanced due diligence at LSEG Risk Intelligence, states, “Our research indicates that organizations expect increased spending and higher volumes of Enhanced Due Diligence requests. As many face the challenge of doing more with limited resources, there is a pressing need to manage costs while ensuring compliance and maintaining the quality of EDD.”
He adds, “Although AI may seem like a quick fix, a more nuanced, human-centric approach is essential. While AI presents significant benefits in the EDD realm, it must be used responsibly, with continuous human oversight. Failing to do so could result in greater risks, rather than alleviating them.”