South Asian banks need AML overhaul says Deloitte report

Banks and financial institutions across South Asia need to overhaul their anti-money laundering (AML) mechanisms according to a new report published by Deloitte.

The South Asia Anti-Money Laundering Preparedness Survey found that banks are currently reactive in their approach to AML mechanisms and need to face up to meeting heightened regulatory expectations.

The survey of banks and financial institutions in India, Sri Lanka and Bangladesh conducted between January and March 2020 covers AML governance frameworks, customer due diligence, sanctions and trade-based money laundering (TBML) and transaction monitoring systems.

Key challenges

Staying compliant with increased regulatory expectations in the future is a key challenge and respondents in the survey listed several challenges.

These included meeting increased regulatory expectations, enforcing current AML regulations, insufficient numbers of adequately trained staff, and increased pressure to
comply with multi-jurisdictional directives.

Technology, processes and people

Survey respondents identified key challenges in the areas of technology, processes, and people.

Technology-related issues included a lack of data accuracy and sufficiency, and increased false positives.

Process-related issues  included limited coverage of known red flags while people-related issues included dependencies on manual processes.

Countering TBML

Banks in the survey reported difficulties implementing and monitoring controls in their trade finance business to combat TBML.

Respondents said they found TBML difficult to spot because it is hidden amongst legitimate transactions or activity and often involves genuine trade. Consequently they face challenges identifying any network of hidden relationships in data between trade partners and ports.

They also faced difficulties detecting under- and over- invoicing and felt they lacked a single automated system that can combine screening data.

Deloitte’s South Asia Anti-Money Laundering Preparedness Survey can be found here.

Categories: Trade Based Financial crimes News

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