Banking and Insurance Execs to Spend More for Anti-Money Laundering, Terrorist Financing Compliance

Banking and insurance executives overwhelmingly plan to spend more, especially on staff, to help strengthen their anti-money laundering (AML) and terrorist financing compliance programs, according to new research by the audit, tax and advisory firm KPMG LLP. Competition for experienced professionals, however, seems to be at an all-time high.

“Financial executives responding to a KPMG survey tell us that they plan to add headcount to make their AML and terrorist financing compliance initiatives more robust and dynamic, but we are noting an ongoing struggle in the market to find the appropriate available talent to get the job done,” said Darren Donovan, a principal and Forensic leader for the Banking and Finance sector in KPMG’s Forensic Services practice.

According to the KPMG survey of banking and insurance executives at the Anti-Money Laundering Audit & Compliance Forum in New York, 77 percent of respondents said they plan to increase their financial commitment to these compliance programs over the next 12 months. As much as 53 percent of the respondents said they will increase their AML and terrorist financing compliance workforce in the next year.

“It’s clear that senior management understands that they will need to add resources to their compliance programs,” said Antonio Pereira, a principal who focuses on the Financial Services industry and anti-money laundering services in KPMG’s Forensic Services practice. “Now the trick for them is to strike a balance between adding enough resources to achieve and maintain AML and terrorist financing compliance, while positioning their institutions for success in the market.”

Program spending priorities, meanwhile, will focus on monitoring and training. Some 80 percent of the respondents said they plan to invest in transaction monitoring, which Donovan pointed out will require a commitment to technology and proper training of employees. Some 76 percent of the survey respondents said they have already invested in new technology, with 17 percent of the executives noting plans to improve their IT in the near future.

“Financial institutions that are planning to add technology to assist in their AML and terrorist financing compliance efforts should understand that the work really begins before implementing a new system,” added Donovan. “They will need to consider how to best implement the new IT system with current risk management programs already in place and ensure that it is tailored to meet their institution’s specific risks and situation.”

Additional Survey Findings:

* Seventy-two percent of survey respondents complete a risk assessment of their customers at account opening, and 53 percent of respondents say account opening procedures are among their investment priorities in the next year.

* Among those who complete a risk assessment of customers at account opening, 46 percent indicated that they update the risk assessment at least once every 12 months, while as much as 11 percent do not update their risk assessments at all.

KPMG’s survey was based on surveys distributed between September 18 – 21 at the Institute for International Research’s 16th Annual Anti-Money Laundering Audit & Compliance Forum held in New York City. Survey respondents included professionals from the banking, securities, and insurance industries, all of whom are involved with their institution’s anti-money laundering and terrorist financing compliance initiatives.

Source: KPMG LLP