The Hindu Business Line : ‘Anti-money laundering costs soaring’

The cost of fighting money laundering has risen dramatically for banks across the world as they have become increasingly engaged in the struggle against criminality, according to a KPMG Forensic study of 224 banks in 55 countries, which found that spending on anti-money laundering (AML) systems and processes has risen by an average of 58 per cent over the last three years.

In North America, West Asia and Africa, spending has increased by 70 per cent or more. The firm’s publication, titled ‘Global Anti-Money Laundering Survey 2007’, aims to provide an insight into how the industry is embedding new requirements.

Senior management

It found that there has been a marked shift in the attitude of senior management in India and the Asia-Pacific region, with increasing interest and involvement of senior management in AML.

“However, the task is becoming more difficult due to the increasing complexity of the financial markets in which they operate, including greater exposure to sometimes unfamiliar emerging markets and the dramatic growth of alternative assets.”

Biggest challenge

Stating that more than $1 trillion is being laundered every year by drug dealers, arms traffickers and other criminals, the report said that recent years have seen rapid change in the financial services industry and growing regulatory expectations and pressures. “Combating money laundering and terrorist financing continues to be a major challenge for the banking sector, as gatekeepers to the legitimate financial system.”

The report also found that senior management are getting more involved in AML, with 71 per cent of banks saying that directors at the highest level are actively involved, up from 61 per cent in 2004.

“Most respondent banks (85 per cent) have a global AML policy, ranging from a high of 100 per cent in North America to a low of 58 per cent in West Asia and Africa.”