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Last Updated: Sunday, 19 September, 2004, 23:37 GMT 00:37 UK
Bank spending on laundering soars
US Dollars
Banks are under increasing pressure to stop dirty money
Banks and financial institutions are spending more on technology to beat money laundering, a new survey finds.

According to KPMG, four out of five financial institutions have increased their spending by an average of 61% over the past three years.

But many of the 293 surveyed were unable to track cross-border flows of dirty money, the report said.

Only half checked if clients were "politically exposed" or might present a heightened risk of corruption.

"This is definitely something which needs to be tightened up," said Adam Bates, global chairman of KPMG Forensic.

"I don't think the regulators, or the public, are likely to find it amusing the next time a bank is found taking money from a corrupt general or political leader."


Pressure from international regulators, particularly since 9/11, has increased the reputational risk faced by institutions who cannot show they are taking financial crime seriously.

There's no substitute for a well-trained human brain
Adam Bates, KPMG Forensic
Technology and staff training spending have therefore leapt, Mr Bates said.

"Get both of these right, and you build yourself a corporate radar system highly attuned to money laundering risk," he said.

More than half now have sophisticated IT systems, but 94% still rely primarily on employees spotting discrepancies to trigger an investigation.

Partly, that reflects the need for humans to check the possible breaches which software can flag, Mr Bates said.

But it also includes the fact that counter staff can often see problems - for instance, a customer whose use of banking services suddenly changes - well before a computer could pick them up.

"There's no substitute for a well-trained human brain," he said.

Suspicious activities

The report found that 84% of banks said the tighter regulation was acceptable.

But there were widespread complaints about the different requirements of jurisdictions around the world - and about the lack of feedback from some law enforcement.

In 2003, KPMG produced a report for the UK government which outlined weaknesses in its anti-money laundering policies.

In particular, it noted a massive surge in reports of suspicious transactions, but a lack of personnel to deal with them and limited channels for telling those reporting whether they were doing the job correctly.

Experts say the UK's prime financial intelligence unit, the National Criminal Intelligence Service, has cleaned up its act since then.

Firms lag on money laundering fix
31 Mar 04  |  Business
UK pledges dirty money shake-up
01 Jul 03  |  Business

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