Banks must improve staff skills to curb money laundering

Banks must improve staff skills to curb money laundering
Comment E-mail Print Share
First Published: Thu, Aug 16 2007. 04 36 PM IST
Updated: Thu, Aug 16 2007. 04 36 PM IST
New Delhi: Banks in India and some other Asia-Pacific countries should improve skills of their staff to curb money laundering activities as training programmes are relatively unsophisticated and laws outdated, global consultancy firm KPMG has said in a report.
“Respondents across Asia-Pacific tell us that training in many parts of the region is relatively unsophisticated, reflecting outdated legislation and lack of regulatory pressure,” according to a global study by KPMG Forensic.
The study noted that 17% of the respondents in the region said they provide training in anti-money laundering (AML) activities to less than 40% of their employees.
KPMG said although it was common for banks in India to provide training that met minimum regulatory requirements, the quality of training taking place in the region might need to improve to bring it up to international standards.
The study, conducted among 224 banks from 55 countries, found a marked shift in the attitude of senior management in India as well as Asia Pacific region with increasing interest and involvement of top officials in AML activities.
“With international banks bolstering their presence in emerging market economies, and with a low interest rate environment driving growth in alternative assets including hedge funds and private equity, the need for more stringent AML processes has only grown,” KPMG India Head (forensic services) Deepankar Sanwalka said in a statement.
Banks would need to work extremely hard to maintain any advantage in the war against money laundering and terrorist financing, he said.
The KPMG study mentioned that there was a ”real desire in India to try to meet the various requirements of main international regulators”.
Reserve Bank was also establishing AML regulations in line with best international practices, the study added.
As a safeguard mechanism, banks in India tend to apply their home market requirements as a minimum standard for overseas branches and make additional provision for any local requirements which are in excess of that minimum standard.
Globally, banks spending on AML systems and processes has risen by an average of 58 per cent over the last three years. On the contrary, banks in Asia-Pacific region considered AML to be just another compliance issue which brings costs but no tangible benefit to financial institutions.
Banks in this region claim the lowest increases in spending on AML in the three years since KPMG conducted its last survey in 2004, and are anticipating future growth that is in line with the global average, it said.
This may be considered surprising in light of the proposed or recent AML legislation introduced in a number of countries including India, Japan, Korea and Singapore, it added.
Comment E-mail Print Share
First Published: Thu, Aug 16 2007. 04 36 PM IST
More Topics: KPMG | banks | India | Asia-Pacific | money laundering |