Banks in a Government Accountability Office study spent between 0.4% and 2.4% of total 2018 operating expenses on anti-money laundering activity and Bank Secrecy Act compliance, the GAO said today. While the largest banks in the study spent far larger absolute sums, they relatively less (0.5% and 0.7%) on AML/BSA compliance as a share of expenses. The five community banks in the study spent 0.4%, 1.1%, 1.3% or 2.4% of operating expenses on these activities.
Within the AML/BSA function, financial institutions on average allocated 29% on customer due diligence; 28% on reporting requirements; 18% to compliance program requirements, such as training, testing and internal controls; and 17% to software and third parties. Banks studied spent an average of $15 per new account on customer due diligence requirements, although this sum ranged from $5 to $44, based on banks’ geographies and customer bases.
While none of the banks studied (and just one large credit union) imposed direct fees to recoup AML/BSA compliance costs, banks reported restricting access to higher-risk products and services as a way of managing risks and costs. The report suggested that AML/BSA requirements can increase the cost of offering online account opening solutions.