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Financial firms have no faith in anti-money laundering software

05 July 2002  |  4445 views  |  0 cash colour

British banks have little faith in the ability of anti-money laundering software to spot suspicious transactions. The negative response is endemic, and includes the small percentage of financial institutions who have installed dedicated packages.

The results are revealed in a report prepared by the University of Leicester's Scarman Centre from a survey of British Bankers Association members.

Researchers found that only 6.2% of survey respondents were equipped with dedicated anti-money laundering software programs. Most financial institutions were "very negative" about the capability of software to monitor transactions effectively, sates the report, including firms in which such systems were used.

Other gripes centred on burdensome Know Your Customer (KYC) requirements. Over a third of respondents believed that regulators placed too much emphasis on KYC. 58.2% of respondents believed that KYC procedures could lead to clients being alienated, and 46.3% believed KYC procedures could result in lost business.

Professor Martin Gill, the report's author comments: "The financial sector is in the spotlight post September 11th, we now know that they are struggling to cope with regulation. Not only is it seen as burdensome, in some cases regulatory requirements get in the way of tackling money laundering."

Many respondents felt that the regulatory agencies could do much more to help make KYC effective by facilitating access to databases; and by promoting public awareness that KYC is a legal requirement and not an imposition by financial institutions.

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