USA Patriot Act Signals Technology Investments For Wall Street Firms

Financial research firm TowerGroup has estimated that US brokerages will spend $700m on compliance systems over the next three years. The group claimed that the US Patriot Act has had a tremendous impact on the regulatory infrastructure of the securities industry – including driving the need to quickly implement anti-money laundering (AML) strategies across an industry that has not traditionally fallen under such strict guidelines. Unlike their retail banking counterparts, investment banks are starting largely from scratch in deploying technology that can flag and track transactions that may be linked with illegal activity, said the group. For broker/dealers, non-compliance with AML mandates carries huge downsides – including exposing firms to monetary and reputational risk. So while AML compliance may require substantial investments in technology and process changes, these investments should not be judged strictly on the basis of traditional return on investment.


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