Report: Money Laundering High on Radar with Company Officials

The latest KPMG Global Anti-Money Laundering (AML) survey tracking fraud and other trends that are watched closely by financial institutions indicates that the topic “has never been higher on senior management’s agenda.”

KPMG officials and analysts said financial institutions are making significant changes to its AML protocols, more so in 2014 than in prior years. Key drivers of this stem from heightened regulatory fines and actions as well as the growing threat of criminal prosecutions against banks and their staff, including the highest ranking officials. The study indicates that 88% of those polled believes its Board of Directors takes an active interest in AML. That tally is up by 26% over the last three years. Only 3% did not believe their Board of Directors takes an active interest in AML issues.

Notable within the study was that respondents believe the cost of fighting AML continues to grow among financial institutions and at a rate greater than what was predicted in 2011, the last time KPMB unveiled a study on the topic. The greatest area of such spending has been on transaction monitoring systems. However, bucking the “you get what you pay for” adage, satisfaction with such systems at present is lower than it was in 2011 or 2007, according to KPMG statistics. The study’s authors believe senior management has often failed to ask the right questions, leading to the higher spend than expected on monitoring systems: “We believe that senior management will continue to underestimate AML expenditure unless lessons are learned from past mistakes.”

Perhaps part of this comes from a gap in education. KPMG noted that more than 1/3 of those polled noted their Board of Directors does not receive formal AML training. Comparatively, 86% of front office staff receives such training to stay current, with an even higher percentage for those in North America.

- Brian Shappell, CBA, CICP, NACM staff writer
To view the study, click the following link:

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