Companies forced to take money laundering more seriously

Money laundering remains a serious problem worldwide and bankers are battling to meet the regulations to prevent money from being 'washed clean'. Image: AdamR Free Digital Photos

In South Africa the Reserve Bank earlier this year fined the four major banks R125m collectively for having poor money laundering controls and JP Morgan Chase was fined US$2bn for violations of the Bank Secrecy Act in the US.

The latest survey by professional services group KPMG on money laundering showed that 88% of senior managers felt that stopping 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 surveys were done in 2009 and 2011.

The latest survey‚ published this week‚ was done in 48 countries and involved the participation of 317 heads of 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.

Criminal prosecutions

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% a year for banking institutions‚ exceeding previous predictions of more than 40% a year three years ago.