Banks still failing money laundering fight

Many banks are still unable to monitor financial transactions across different countries, despite a massive increase in spending on anti-money-laundering technology.

The Global Anti-Money-Laundering Survey 2004 by consultants KPMG found almost half (46 per cent) of respondents operating in six to 10 countries are unable to monitor a single customer's transaction and account status across several different countries.

For larger global banks operating in more than 10 countries, the figure was a quarter.

Despite this, banks are spending more than ever before on technology and training to combat money laundering and are flagging up an increased number of suspicious transactions.

The average reported increase of anti-money-laundering compliance is 61 per cent over the last three years – a trend that is set to continue for the next three years, according to the research.

Automated monitoring systems are a key plank of the technology strategy for fighting money laundering with 61 per cent using internally developed systems, 45 per cent using externally developed systems and 22 per cent using neither.

But the human touch is still seen as vital and 94 per cent said they rely on staff vigilance in addition to technology.

More than half of respondents also said anti-money laundering technology could be better. Suggested improvements included better client and transaction profiling; pattern recognition of transactions rather than identifying transactions in isolation; the broadening of electronic systems; and real-time monitoring of historical data.

The KPMG report said: "Detection of these complex scenarios, particularly for large institutions is very difficult without the use of advanced monitoring techniques and specific software technology."

The survey questioned 209 banks in 41 countries with 37 per cent in Western Europe, 24 per cent in the Asia-Pacific region, 16 per cent in North America and the rest from Latin America, Russia, Africa and the Middle East.