5 reasons you are spending too much money on AML compliance

‘I rather save money on AML compliance or not do it at all,’ said no fintech or crypto business owner ever.

The cost of sustaining regulatory compliance is consequential—and as regulations skyrocket, so does the price tag.

Every day across the world, businesses walk a thin tightrope. If they fall off one side of the rope, they might find themselves in peril with regulators, but if the balance tilts in the other direction, the compliance's unreasonable load can harm the business.

To keep up with the rising wave of regulation, businesses often have little alternative but to toss more people, time, and resources at the problem, which can add up quickly.

The cost of being AML good

Here are some facts for you.

Let’s look at the total for key markets in the industry. The Asian-Pacific, European, Middle Eastern and African, Latin American, and North American markets pay about €181 billion per year to preserve financial crime compliance. That number is impressively extensive —even outlandish – but it conceals the load placed on each company.

Fifty percent of respondents to a Risk Management Association survey said they spend 6-10 percent of their revenue on compliance costs.

The true cost of your AML compliance

We are always on the lookout for a bargain. Every time we need to implement a new process or tool, we create a trusty Excel spreadsheet with the X offers on the table and evaluate them. We always want good value for money.

You may think that getting a team of highly-priced AML specialists, developing your own customer onboarding flow, and getting 10+ of the latest compliance tools is a major investment at the moment, but will be worth it in the long run. At least you hope it will be worth it.

Well, here are the 5 reasons why you are spending too much money on AML compliance.

1. An in-house compliance team

People cost money, especially highly skilled full-time employees. The ‘problem’ with official employees is that it takes you time and money to hire them: all the scouting, interviewing, and onboarding. And once you’ve found your perfect fit, you can’t just let them go that easily as well, with all the severance packages that come with it.

According to Glassdoor the salary of an AML Officer in Tallinn, Estonia is around €30,000* per year. For comparison, in New York, USA the same position will cost you over €125,000* per year.

If you count the employer’s tax on top of it, the cost of hiring (and letting go) - you start realizing that maybe keeping the AML team to only the most essential players is not a bad idea.

Just to be clear, at Vespia our goal is not to replace compliance teams, we are avid supporters of every company having enough AML experts that would take ownership. But how wonderful would it be, for you as a business owner, to have only the necessary amount of people and let the rest of the processes work automatically?

2. Outsourcing to lawyers

On average, the rate of a lawyer ranges from €100 to €400 per hour. A proper verification and due diligence of one company can be anything from 2 hours to several weeks.

When outsourcing to a law office, the due diligence costs can be at least €1,000-€5,000, because usually it is a legal team effort. There is the data collector, the data analyzer, and the final person confirming the quality and putting her signature.

If you need to investigate a bigger company with a complicated structure and owners registered in BVI, the total amount can easily go over €10,000 per verification project.

3. Sticking with the dinosaurs

I appreciate the AML pioneers like Dow Jones, Dun & Bradstreet (D&B), Refinitiv, and LexisNexis. They have managed to build large proprietary databases of quality data, get a lot of sources and develop complicated systems.  

If you are a fan of tradition, corporate engines, and quality brands, go for it. However, a little heads up - be prepared to pay.

The average price of a D&B due diligence report is €189, and this is just for regular folks like you and me. If you are a company, you probably need at least a few of their different modules that require an annual prepayment of a whopping €100,000 or more.

Speaking of modules, Refinitiv can charge anything from €15,000 per module. You may need a few of them modules and you may need to pay extra for the number of checks you perform.

If you can afford it, I salute you, you have made it with your business! Just a warning, this one tool will cover around 1/10 of what you need. You will need to purchase the 9+ other tools to take care of the million other aspects of your AML compliance.

4. Using 10+ different AML, KYB & KYC tools

Since the AML directives are a bit vague at times we often get the impression that the more tools we throw in there, the merrier. But is using tens of different AML tools really solving your problem?

Let’s calculate.

1. Business register access (if you can get in): EU is free; outside the EU around €25-€100 per document.
2. Repeat point 1 for every country that you need. One company can have company shareholders that are registered in other countries.
3. UBO register access (probably you will not get in): EU is €5-€100; outside EU around €25-€100 per document (if there is a UBO register at all).
4. PEP, Sanctions, and Adverse media: usually come in a bundle. Be prepared to pay a monthly or annual fee in advance, anything from €150 to €1000 per month for a small volume of checks. Pay-per-verification options are practically non-existent, some single providers offer for €15 per check.
5. AML monitoring: Whether you want to monitor the business register or the PEP, Sanctions, or Adverse Media check, be prepared to pay at least double the original amount.
6. Identity verification: depending on the provider you can get as low as €0.5-€2 per verification. But be prepared to pay a monthly minimum commitment fee and sign an annual contract. Starting prices are usually around €150 per month for a small package.
7. Transactions monitoring: prices vary based on volumes and the types of rules you want to implement, usually the starting point is around €1000 per month.

These are just your average Joe compliance checks, not including the additional tools required for your specific industry.

In many industries, you will also need a tool to check the license of your customer/partner/supplier. In the crypto space, you probably should add a few tools to check the crypto wallet and the blockchain data.

5. Developing your own onboarding and verification process

Chances are you got fed up with not finding the right fit when it comes to AML customer onboarding front-end and back-end. You are on the verge of just building the darn thing yourself because you can’t continue doing verification and onboarding f business customers manually.  

In order to get your AML processes up and running you better start with an admin panel or a type of CRM, where you can keep track of your customer's data and their status. You will also need to integrate all the tools mentioned in points 3 and 4, or at least somehow connect the dots in your admin panel.

Together with the back end (the admin panel), you also need a front end. We call it the onboarding flow, which is a place where you direct your customer so they can provide more of their information, upload their incorporation documents, answer AML questions and take pictures of their ID.

A project like this can cost you hundreds of thousands of euros even with having an in-house development team. It will cost you even more if you order it from an outsourced development team. And this is not even your core business, but you are just so frustrated with not being able to find the right solution.

Overall, with all the Human Resources, outsourced consultants, classical tools, modern tools, and your own development resource - the costs do pile up. Even a small business can easily pay tens and hundreds of thousands of dollars per month purely on AML compliance.

How Vespia can help you cut down costs on AML compliance

Vespia is designed to help you save time on due diligence checks while assuring a more accurate and comprehensive screening strategy.

With our real-time data from over 4000 AML databases and commercial registers of 300 jurisdictions, you get global customer verification at your fingerprints.

Everything you ought in one centralized tool

When employing our compliance platform, you no longer need to sift through an outrageous number of sources in the hopes of finding valuable information.

It is because Vespia curates everything you need into a single online tool, meaning you can access all the business registers and databases, sanctions lists, PEP lists, and media information from an all-in-one solution.

Outsource to Vespia COaaS (Compliance Officer as a Service)

With Vespia COaaS we offer your access to our network of Compliance Officers ready to start building your AML processes today. Whether you need an AML specialist part-time or full-time, or just for a specific project to help your AML team with the increased workload - the COaaS solution is flexible to your needs.

Our AML specialists are also happy to help with any tough verification cases, analyze the data for you, help you understand the context, and provide suggestions. Anything you need to make a well-informed decision about whether you want to work with a business or not.

Use Vespia Onboarding Flow for fully automated business onboarding

Vespia Onboarding Flow is a front-end SDK solution that you can easily integrate into your website or product. You just need to add a ‘Verify me’ button and all of your customers will be directed into the onboarding flow where they can provide their information, go through KYC, upload documents and answer AML questions.

The coolest thing is that you can rearrange the steps of the flow, and add your colors and logos to the process, so your customers will know it is still you.

Export auditable reports in seconds

Once the solution has completed its comprehensive screening procedure, you will be able to forge a detailed report that you can export securely in PDF format. These reports are fully auditable, which will make it easier to fulfill AML compliance requirements.

Integration with existing processes

Thanks to our API, you can seamlessly integrate Vespia into your current workflow. That makes it even easier for your team to pick up the tool, as they can easily merge its functionality into their usual screening processes.

The bottom line

Automated verification is a win-win situation for you and your customers. Not only are you saving the company money with more sufficient results, but you are also reducing time investment – and often the direct cost incurred – by your customers.

Customers are no longer required to mail documents or show up in person for identity verification. Instead, they can enjoy a fast and frictionless onboarding process from the comfort of their home and look forward to an enjoyable experience with your brand and your products.

Are you interested in knowing how we elevated our customer's Eurora business KYC and AML process with our all-in-one platform? Read the case study here!

Want to reduce the cost of your compliance? Talk to our experts and let us know your needs!

The prices in this article may be subjective to Vespia’s personal experience and come from the use cases that the Vespia team has come across.

*At the time of publishing 1 EUR ≈ 1 USD.