Rising cost of money-laundering fight

A STUDY conducted by financial giants KPMG has found the cost of fighting money laundering has risen dramatically for banks worldwide in recent years.

It said the task is becoming more difficult due to the increasing complexity of financial markets, greater exposure to unfamiliar emerging markets and the growth of alternative assets.

“Irish banks have worked hard and have spent large amounts of money ensuring that their systems meet the enormous range of regulations in place” said Andrew Brown, of KPMG Forensic.

“Now, they need to focus on training their staff, not only to remain vigilant but so that they know how to be vigilant.”

KPMG’s study among 224 banks from 55 countries, including Ireland, found that banks’ spending on anti-money laundering systems and processes has risen by an average of 58% over the last three years.

The biggest spending was on transaction monitoring and staff training costs.

The Irish Bankers Federation said banks in Ireland need to continue to invest significantly in anti- money laundering systems at a national level.

Bank of Ireland said they have, in recent years, increased their investment into combating money laundering with the hiring of more staff and updating systems.

An AIB spokesman said: “We take our anti-money laundering responsibilities very seriously. We employ dedicated, experienced resources, both people and systems, to comply with all relevant requirements such as those stipulated by the Criminal Justice Act 1994 (as amended), and relevant European legislation, and we continue to invest in employee awareness of our obligations through staff and IT solutions.”

The KPMG report also highlighted the additional money laundering risks created by the enlargement of the EU.

Many of the 10 countries that have recently joined have not historically had stringent anti-money laundering processes in place and it is likely to take these countries some time to bring their processes up to the standards required under the EU Third Money Laundering Directive, the report said.

“Bank staff need to keep informed of current events. They need to watch out for transactions originating or involving countries where major political upheavals or financial aberrations have occurred,” said Mr Brown.

“And the banks have to look to be one step ahead of the regulations and one step ahead of the money launderers,” he added.