LONDON Jan 29 One in three senior bank executives believes their institution has poor anti-money laundering controls at a time when the threat of vast regulatory fines and criminal prosecutions is increasing, according to a KPMG survey.
The annual survey, which quizzed 317 anti-money laundering and compliance professionals in banks and financial institutions across 48 countries, said only around one half thought their systems were able to provide a complete picture by monitoring transactions across businesses and jurisdictions.
Regulators worldwide have been cracking down on lax money laundering controls and last year, Europe's largest bank HSBC paid $1.92 billion to settle U.S. charges it allowed Mexican and Colombian cartels to launder drugs proceeds.
The UK division of South Africa's largest bank, Standard Bank Group, became the first commercial bank to be penalised in Britain for such an offence last week when it was fined 7.6 million pounds ($12.6 million).
"Anti-money laundering has never been higher on senior management's agenda, with regulatory fines now running into billions, regulatory action becoming genuinely license threatening, and criminal prosecutions of firms and individuals becoming a reality," said Brian Dilley, KPMG's global head of the Anti-Money Laundering Practice.
KPMG said its report showed that institutions are nevertheless continuing to outsource and off-shore these parts of their business, despite senior managements' concerns about a lack of control and oversight.
Around one third of those asked had outsourced and 46 percent had off-shored some of their anti-money laundering functions.