New data released by SmartSearch, the UK’s leading provider of digital compliance and anti-money laundering (AML) solutions, found that almost three-quarters (72%) of regulated companies feel overwhelmed by ongoing anti-financial crime compliance demands.

Financial crime is costing the UK around £100bn a year, and leading to very real-world problems, such as human-trafficking, money laundering, and the sale of drugs. In response to this, regulators across industries are understandably working to keep pace.

SmartSearch’s latest study, The Compliance Forecast, shows that while regulations play a critical role in combating increasingly sophisticated criminal activity, many businesses are finding it challenging to navigate the growing complexity. As regulatory demands expand, surveyed firms report difficulty managing compliance effectively, due in part to a reluctance to embrace digital solutions.

The report shows that amid an increasingly complex regulatory landscape, nearly three-quarters (73%) of businesses are concerned about their ability to stay compliant, with almost a third (30%) admitting fears about the next 12 months.

Using insights from over 600 senior decision makers working in finance, property, legal, and accounting businesses in the UK, the study focuses on five key areas: crime, confidence, challenges, complexity, and cost.

The key findings include:

• The fight against financial crime may be overwhelming: Nearly three-quarters (72%) of firms feel overwhelmed by ongoing anti-financial crime compliance demands. This issue is especially prominent in high-risk industries like accountancy and financial services, where 75% of businesses report feeling heavily burdened.
• Increasing regulatory demands are eroding confidence: Nearly three-quarters (73%) of businesses say they lack confidence in their ability to stay compliant with current regulations. Moreover, almost a third (30%) are expecting pressures to increase over the next 12 months.
• Regulatory complexities require new approaches: More than three-quarters (76%) of organisations feel that regulatory changes are hindering expansion. More than one-in-ten (13%) feel compliance obligations have damaged customer relations. However, it does not need to be a balancing act. New systematic approaches and digital-first solutions can turn it into a strategic advantage for businesses.
• Compliance is becoming increasingly complex: The regulatory environment is growing increasingly difficult, with 89% of businesses finding current regulations challenging to navigate. More than two-thirds (68%) anticipate this complexity will continue to rise over the next year.
• The cost of compliance is increasing: Compliance costs have risen sharply, with 74% of businesses experiencing financial strain over the past three years. Nearly a third of respondents now see expenses relating to compliance as a barrier to profitability.

Almost a third (31%) of businesses listed financial crime as a key factor hindering the UK’s economic growth, highlighting the importance of regulations. However, given concerns around growth and a lack of confidence in staying compliant, it may be necessary to look at current frameworks to ensure that they strike a balance between protection and growth.

Phil Cotter, CEO, SmartSearch, said: “The Compliance Forecast offers us an outlook on the substantial challenges regulated businesses face in an increasingly complex landscape. With financial crime costing the UK up to £100bn a year, strong regulation is essential. But, as it becomes increasingly complex in order to keep pace with criminals, businesses must respond accordingly to ensure they are able to grow and continue to deliver excellent customer service.”

“Adopting a proactive, digital-first strategy offers businesses a streamlined compliance process, reduced costs, and enhanced customer experiences. Organisations that have embraced these solutions are better equipped to navigate evolving regulations and mitigate risks.”

The following steps can help businesses transform compliance from a burden into a strategic advantage:

1. Adopt digital solutions: Leveraging tools like automation can streamline compliance processes, reduce manual workloads, and keep businesses competitive in an evolving landscape.
2. Identify specific needs: There isn’t a one-size-fits-all solution. Tailoring solutions to industry-specific risks enables companies to address their unique regulatory challenges more effectively.
3. Collaborate for resilience: Working closely with regulators, peers, and technology partners ensures businesses stay ahead of regulatory changes, while also sharing best practices and reducing uncertainty.

Businesses should view compliance as an ongoing journey. By integrating digital tools, sector-specific strategies, and collaborative efforts, companies can turn compliance into a core strength that supports sustainable growth while protecting themselves and their customers.