Financial sector to strengthen anti-money laundering systems

June 18th, 2009 - 7:24 pm ICT by IANS  

KPMG New Delhi, June 18 (IANS) With slush funds being increasingly used for financing terrorism, Indian financial institutions are planning to increase investment in their anti-money laundering systems, a survey by global auditing company KPMG has found.
In a statement Thursday, KPMG said 76 percent of respondents to its survey of domestic financial institutions said their investments on anti-money laundering compliance would increase over the next three years.

“Transaction monitoring and implementation of an automated solution are also rated among areas requiring largest investments,” KPMG said.

“India’s escalating global exposure is also rendering its financial institutions vulnerable to money laundering,” it added.

More than 2,000 respondents believed introducing policies and procedures in line with global best practices would be one of the major areas for investment.

Though almost 70 percent of the respondents stated they have an effective system for transaction monitoring, it still remained a priority area for investment.

“Rising future cost is largely attributed to transaction look-back reviews, transaction monitoring, introduction of policies and procedures in line with global best practices and automation of account opening procedures,” KPMG said.

“This demonstrates that significant effort is required in implementing AML (anti-money laundering) compliance programmes, including transaction monitoring.”

KPMG noted that the risks of money laundering were not limited to terrorist financing. “If unchecked, money laundering could have a deep impact on the economy of a country with large amounts of unaccounted funds resulting in destablization of a country’s economy.”

It said though Indian financial institutions have covered a “large ground” in anti-money laundering compliance, “significant investment and improvement” are still required.

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