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Money laundering compliance challenge for banks

04 November 2003  |  8469 views  |  0 Money laundering compliance challenge for banks

Financial services institutions face significant challenges in complying with the USA Patriot Act and other anti-money laundering requirements, with most projecting an increase in compliance costs over the next year, according to research conducted by Deloitte & Touche.

The survey of 167 US executives demonstrate that financial services firms still have numerous issues to address, and will need to deploy significant resources in areas where they have anti-money laundering (AML) responsibilities. These areas include restructuring business processes, increased staffing, employee training, purchasing or developing new technology, and enhanced monitoring of regulatory developments.

And, with almost 40% of financial services executives reporting an increase in the number of suspicious activity reports filed within the last six months, financial firms urgently need to accelerate their AML compliance efforts, says the consultancy.

Financial executives indicated that establishing appropriate business processes, monitoring US AML regulations, and people-related issues were most important in complying with the USA Patriot Act.


Although technology is viewed as a significant concern, it is not considered as a top-rated issue. While critical in enabling AML compliance, technology depends on an institution's business processes and people to be effective, the survey showed.

Roughly two-thirds of respondents reported their institution use a vendor application to automate Office of Foreign Assets Control screening, an additional 21% combine a vendor application with software developed internally, and eight per cent use software developed internally. Surprisingly, one in ten institutions do not use any software for screening.

"With a dramatic increase in the volume of transactions that must be reviewed, institutions have to rely more on IT systems to automate routine reviews and identify items that require more detailed analysis and evaluation," says Michael Zeldin, Deloitte & Touche's global anti-money laundering practice leader. "Each firm will have to create its own AML compliance system based on its resources and ability to pay for resources needed."

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