Money laundering, terrorist financing increases in region - Survey | Daily News


Money laundering, terrorist financing increases in region - Survey

Growth in South Asia has far exceeded that of other countries outside the region in the past decade,Deloitte Touche Tohmatsu India’s South Asia Anti Money Laundering Preparedness Survey report 2020 said. Modernisation of the banking and financial services industry has been a major contributor to this growth. This resulted in significant credit availability for businesses and individuals, alongside better governance around managing operations.

However, with availability of formal credit, money laundering and terrorist financing activity has also increased in the region. Fraudsters and criminals have used banks and financial institutions (FIs) as conduits.

The estimated amount of money laundered globally in one year is 2−5 percent of the global GDP, or in the range of US$800 billion to US$2 trillion. Though the margin between these figures is huge, even the lower estimate underlines the seriousness of the problem that governments, banks, and FIs need to address. In South Asia particularly, the rapid adoption of online payments and wallet technologies means banks and FIs have had to fast-track and enhance their know your customer (KYC) and transaction monitoring processes.

“The COVID-19 pandemic has further accelerated digital transaction volumes, changing customer behaviour. New emerging risks have compounded issues pertaining to Anti-Money Laundering (AML) compliance. As a result, efforts to combat money laundering need to be increased. As a result, the efforts to combat money laundering need to be increased,” KV Karthik Partner – Forensic, Financial Advisory said.

With criminals using newer ways of laundering money and changing regulatory expectations, banks find it challenging to keep their AML compliance programmes effective, guarding against these increasing complex money laundering activities.

In this backdrop, we wanted to understand the preparedness levels of banks in South Asia to meet revised regulatory requirements and challenges faced by them in their AML compliance programmes.

“We undertook a survey of leading banks and FIs in India, Sri Lanka, and Bangladesh in January−March 2020.

The survey covers the following areas – AML governance framework, customer due diligence, sanctions and trade-based money laundering, and transaction monitoring systems,” Uday Bhansali, President – Financial Advisory said.

The findings outline several key challenges faced by banks and our report outlines certain leading practices to support their compliance efforts.

“We hope that the survey report will influence discussion and debate among banks, practitioners, regulators, and governments on how to improve AML and counter terrorist financing efforts.”

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