Divergence in global financial regulations is costing over USD 780 billion annually to businesses, a survey said highlighting the need for increased regulatory co-operation across the world.
A survey by the International Federation of Accountants (IFAC) and Business at OECD (BIAC) conducted on 250 regulatory and compliance professionals from major global financial institutions show that regulatory divergence costs financial institutions between 5 to 10 per cent of annual revenue turnover.
Over half of respondents said resources have been directed away from risk management due to the costs associated with regulatory divergence, which refers to inconsistencies in regulation between different jurisdictions, it said.
"The USD 780 billion price tag is conservatively inferred by the findings, with smaller institutions twice as likely as their larger counterparts to experience very material costs," the survey said.
"The survey highlights the need for increased international regulatory co-operation to reduce the regulatory divergences which are costly on business," Organisation for Economic Co-Operation and Development's (OECD) Director for Public Governance Marcos Bonturi said.
With regard to India, the survey found that more businesses in the country expect the cost of regulatory fragmentation to increase than any other country.
"Four out of five businesses surveyed in India saw an increase in the cost of compliance with conflicting regulation between jurisdictions in which they operate in the last five years and all businesses surveyed in India expect costs to continue to rise in the next five years," the survey added.
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