By Simon Miller
Anti-money laundering (AML) is being squeezed out by the financial crisis according to a survey released today.
The KPMG Global AML survey revealed that there had been a 9% drop to 71% in boards considering AML to be a high profile issue from 71% in 2007.
Brian Dilley, global head of AML at KPMG said that although it was understandable that boards had focused on their survival and the wave of regulatory change, they needed “to ensure that AML remains at the top table, or else risk massive fines and business disruption, particularly in relation to sanctions compliance”.
According to findings, operational costs of AML had nearly doubled in four years by an average 45% with a further 28 percent rise predicted over the next three years.
However, according to KPMG, many AML professionals have a history of under-estimating future costs. In 2007 less than one fifth (17%) predicted a rise of 51% or more, whereas almost a third (31%) said their costs had actually risen by that amount when looking back over the same period.
Dilley commented: “In a cash-constrained environment, it is imperative that AML professionals forecast realistic costs to the board: not only because of the significant risks that need to be managed, but also so they continue to retain credibility with boards who do not take kindly to repeated requests for additional funding.”
Despite this rising expenditure, only 10% of respondents had off-shored or outsourced parts of their AML functions, with 80% having never considered this as an option. Banks may be missing opportunities to save money on some of the lower risk aspects of their AML programme.
The survey also included ‘anti-bribery and corruption activities’ for the first time and this was immediately ranked the third largest area of expenditure, indicating that the extra-territorial reach of, and heightened regulatory expectation associated with, the new UK Bribery Act and the US Foreign Corrupt Practices Act is having an impact.