The attention given to anti-money laundering measures by company boards and management has increased sharply in the past decade with heavy fines imposed by regulators, a survey showed on Tuesday.
The Reserve Bank earlier this year fined the four major banks R125m collectively for having lax anti-money laundering controls and JPMorgan Chase was fined $2bn for violations of the Bank Secrecy Act in the US.
The latest survey by professional services group KPMG on anti-money laundering showed that 88% of senior managers felt that anti-money laundering was a priority, compared with 61% who felt the same in 2004, in the first KPMG survey on the subject. Since then two more were done in 2009 and 2011.
The latest survey, published on Tuesday, was done in 48 countries and involved the participation of 317 heads of anti-money laundering divisions, directors and senior managers at the world’s biggest banks. One of the key findings in the KPMG survey was that 84% of the senior managers felt that the pace and effect of the regulatory burden were posing "significant challenges" to their operations.
In some jurisdictions the prospect of individuals being criminally prosecuted has become a reality. KPMG said many in management felt that it was no longer possible to meet all regulatory expectations.
In Africa, 92% of the managers felt that money laundering posed a high risk within their own businesses, compared with 84% of all the respondents sharing this view.
KPMG said regions with more developing countries such as Africa, the Middle East, and South America needed to take a more proactive approach to reduce their vulnerability to financial crimes.
In South Africa, the Financial Intelligence Centre Act (Fica) was introduced in 2002 to prevent organised crime syndicates from benefiting from illegitimate profits through money laundering and to protect the integrity of the South African financial sector.
The survey also found that the cost of compliance had increased sharply and was set to continue to rise. Survey participants felt costs were going to increase at an average rate of 53% per year for banking institutions, exceeding previous predictions of more than 40% per year three years ago.
This article first appeared in BDLive, 27 May 2014.