New Fenergo research found 66% of APAC compliance teams remain heavily manual, even as institutions explore AI use cases.
According to new research published by Fenergo with Risk.net, financial institutions across the Asia Pacific face rising pressure to modernise compliance operations, yet many teams remain heavily reliant on manual processes.
The report, titled AI and the next era of APAC compliance, surveyed 110 risk, financial crime, and compliance professionals at banks and asset managers in Singapore, Malaysia, and Australia. The results highlighted a widening gap between compliance workloads, intent to adopt artificial intelligence, and the readiness to execute automation at scale.
Two-thirds of respondents said their compliance workload remains heavily manual, while more than half reported periodic backlogs for KYC reviews. The research also found that false positives remain a persistent issue, with respondents citing high false-positive rates across KYC, screening, and transaction monitoring.
These pressures were reported alongside increasing interest in AI adoption, with more than half of respondents saying they are actively exploring AI use cases, although a smaller share said they have begun implementation, and a minority reported not using AI at all.
Fenergo attributed part of the friction to the operational reality of compliance in the region, citing linguistic diversity, fragmented regulatory regimes, and complex data environments as factors that can make data consistency and quality difficult to achieve.
The research identified operational efficiency as the primary driver of AI investment, ahead of cost reduction and task automation. At the same time, data quality was ranked as the single biggest barrier to AI adoption, followed by challenges integrating with legacy systems and concerns around meeting regulatory expectations.
“For organisations at earlier stages of AI adoption, keeping human oversight in the loop remains essential. Regulators expect AI systems to be explainable and well governed. The findings suggest institutions want to demonstrate control over how AI models operate and how decisions are reached, particularly in high-risk areas such as KYC, AML and fraud,” said Bryan Keasberry, APAC Head of Market Development at Fenergo.
Limited familiarity with more advanced approaches also played a part, with only a small proportion of respondents describing themselves as very familiar with agentic AI in compliance. That constraint appeared to influence automation preferences, as most respondents said they would be comfortable only with partial automation, while a smaller portion preferred significant automation.
Despite the caution, a significant share of respondents said they are considering agentic AI for areas such as transaction monitoring, fraud detection, and sanctions screening, and the report suggested investment in AI-enabled compliance tools is likely to rise as scrutiny intensifies and manual workloads expand.
“Regulators are supportive of innovation, but expectations around governance, explainability and accountability are rising. Institutions need to strengthen data foundations and embed controlled, human-led automation first, before scaling more advanced AI capabilities as confidence and regulatory clarity continue to develop,” added Keasberry.
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