The Hindu Business Line : Banks, FIs see need to beef up anti-money laundering system

(From left) Mr Collin Lobo, Associate Director, KPMG; Mr H.N. Sinor, Chief Executive, IBA; and Mr Deepankar Sanwalka, Executive Director, KPMG, at a press conference in Mumbai on Tuesday. - - Shashi Ashiwal

Mumbai , April 19

FINANCIAL institutions (FIs) and banks are under increasing supervision of overseas regulators owing to the rising cases of financial crimes.

FIs now consider it essential to implement anti-money laundering (AML) schemes and comply with international regulations. This was the opinion of about 86 per cent of the respondents who participated in KPMG's survey on AML.

It is estimated that between $590 billion and $1.5 trillion is laundered through the global economy — equivalent to 2-5 per cent of the global gross domestic product.

Mr Collin Lobo, Associate Director, KPMG, said, "There are no definitive reports about the amount of money that has been laundered from specific countries, as governments are unwilling to disclose the figures." However, countries that have high cases of drug trafficking contribute to more than 50 per cent of the estimates, he said.

The survey was conducted among 100 FIs, including public sector banks, private banks, foreign banks, co-operative banks and insurance companies, with over 50 per cent of the FIs having an annual turnover of more than Rs 1,000 crore.

Over 70 per cent of the respondents said that the AML regime in India is in its infancy but moving in the right direction. Almost 90 per cent of the respondents felt that it is absolutely necessary to have a robust AML system.

Over 50 per cent of the respondents perceived `medium to very high risk' of money laundering to their organisations. Only 40 per cent said they were `somewhat satisfied' that the AML practices of their respective organisations matched up to international standards.

Mr H. N. Sinor, Chief Executive of the Indian Banks Association (IBA), said, "The key issue about AML systems is the implementation on the ground level. Banks will need to monitor each transaction; a centralised control room, therefore, becomes very important."

IBA has issued a nodal policy on `know your customer' and AML norms to all member-banks on March 31 and is now working on operational plans, he said. Speaking about some measures Indian FIs can adopt, Mr Lobo said that co-operation among FIs, and between FIs and regulators should increase.

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Banks, FIs see need to beef up anti-money laundering system