Jul 09 2009 Martin Coyle
The fight against money laundering remains the number one priority for the majority of compliance officers around the world, according to recent research. "Mind the gaps", an anti-money laundering and fraud study by consulting firm Tonbeller, said that the importance of the issue could be explained both by Europe's Third Money Laundering Directive as well as Financial Action Task Force scrutiny. FATF had exposed many countries and had provided impetus for increased scrutiny and enquiry levels by national regulators to refocus their regulatory commitment, Tonbeller researchers said.
The research also found that adopting a risk-based approach and ensuring that firms had enhanced customer due diligence were seen as the highest rated compliance activities by compliance staff. Other priorities included automating the case management process and transaction monitoring process, as well as establishing an enterprise-wide AML compliance programme. The integration of AML and fraud data was also given a high priority, Tonbeller said.
Respondents to the survey were found to be vastly in favour of the risk-based approach that most regulatory regimes had adopted, with 91 per cent stating that they could see the value in adopting such an approach. Tonbeller found that the adoption of a risk-based approach would deliver the greatest business benefit, if it was implemented successfully.
"Organisations' enthusiasm for a risk-based approach is not only driven by regulation, but also by an understanding of the operational enhancements and cost efficiencies that it can deliver. By focussing resources on those areas of greatest risk it allows financial institutions to fight financial crime with a customer-centric perspective," the report noted.
Obstacles
In terms of the obstacles to adopting a risk-based approach, respondents said that poor quality data and accessing data from multiple sources caused the main issues. Internal and external costs associated with applying the approach also ranked highly. Lack of IT availability and staff training problems were also factors, respondents said. Turning to fraud, respondents suggested that internal fraud was the toughest type of fraud to prevent. Tonbeller said that the recession had increased the prevalence of internal fraud-related crimes.
"With any economic turnaround still a couple of years away, more layoffs are still to come and this will continue to jeopardise internal control systems, making employee, intermediary, third party contractor and service provider related fraud the greatest threat in the current economic environment," the report noted.
The company said that 55 per cent of firms had started to manage their AML systems in tandem with their anti-fraud defences. Nearly a third of respondents were planning to do so in the next two years. Despite this 21 per cent said that they saw no additional business benefit in integration. The research also found that the financial crisis had affected their firms' investment in compliance. Thirty-seven per cent said that investments had been reduced, while 30 per cent said that it had stayed the same.
Tonbeller spoke to 152 firms around the world for the survey which can be accessed here.
