Banks raise spending to stop money laundering
October 27, 2004
By Ronnie Morris
Cape Town - Banks across the world are spending more on systems to combat money laundering than ever before, according to a study by professional services firm KPMG.
Recent estimates suggest that between $500 billion (R3.1 trillion) and $1 trillion is laundered annually by drug dealers, arms traffickers and other organised criminals.
Of the 209 financial institutions interviewed over three years, 83 percent said they had invested more in combating money laundering. Spending was up by 61 percent on average.
The survey said most banks expected to increase spending by over 40 percent in the next three years, demonstrating that much remained to be done to enhance anti-money laundering controls.
Petrus Marais, a regional chairman of KPMG Forensic, said increased regulation and fears over financing of terrorist groups had boosted investment in anti-money laundering measures.
Banks had rightly identified transaction monitoring and training as key areas.
"Get these right and you build yourself a corporate radar system highly attuned to money laundering risk. This not only helps protect the bank from serious damage to its reputation, but also helps protect civil society against its many enemies," he said.
While many banks continued to rely solely on staff vigilance and exception reports, a lot of these institutions were planning to implement more sophisticated systems, the survey found.
Nearly two-thirds of senior compliance officers interviewed across 41 countries said that their banks had global anti-money laundering policies in place and that greater scrutiny was being applied to their customer bases.
Over 80 percent of banks said they varied the information they required from customers at account acceptance, depending on the risk profile of the customer.
Two-thirds of respondents indicated that they had generated a greater number of suspicious activity reports over the past three years, due in large part to better systems for detection and reporting.
In turn, this had created a challenge for national law enforcement agencies in deploying the resources necessary to process and act on reports.
Brendan Nelson, the global chairman of KPMG's financial services practice, said the survey showed that measures against money laundering were still very much "work in progress".
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