Partner Article

More attention needs to be paid to money laundering, say KPMG

Senior company board members are not paying enough attention to anti money laundering (AML) practices, a recent survey shows.

The KPMG Global AML survey 2011 revealed a 9% drop in boards considering AML to be high profile issue.

A growing range of priorities has put a squeeze on consideration of AML, as have operational costs that have risen by 45% since 2007, with a further 28% increase predicted over the next three years.

Sara Smith, of KPMG’s Newcastle forensic practice, said: “Although it is understandable that boards have been focused on their survival and the wave of regulatory change, they need to ensure that AML remains at the top, or else risk massive fines and business disruption.

“In a cash-constrained environment, it is imperative that AML professionals forecast realistic costs to the board.

“Not only because of the significant risks that need to be managed but also so they continue to retain credibility with boards who do not take kindly to repeated requests for additional funding.”

The survey also included ‘anti-bribery and corruption activities’ for the first time, an area that was ranked the third largest expenditure, indicating the heightened regulatory expectation associated with the new UK Bribery Act and the US Foreign Corrupt Practices Ace.

Recent events surrounding the Arab Spring have placed emphasis on Politically Exposed Persons, the survey finding that the number of respondents with processes to identify and monitor PEPs had increased from 71% to 88%.

Ms Smith went on to note that financial institutions across the world had geared up to adopt a risk-based approach to knowing customers, as the majority now use PEP status as a risk factor.

She added: “Banks now need to ensure that they can justify their relationships with PEPs, particularly with an eye to future changes in their political standing.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .