Money laundering faces crackdown

Banks and financial institutions are clamping down on money laundering.

13:16 20 September 2004

Banks and financial institutions are spending increasing sums on technology aimed at combating money laundering, a new survey claims.

Research by accounting and consulting firm KPMG found that four out of five financial institutions have increased their spending by an average of 61 per cent over the past three years.

The report estimates that between $500 billion and $1 trillion is laundered worldwide annually by drug dealers, arms traffickers and other criminals.

KPMG Forensic said that, since the World Trade Centre attack, financial institutions have become more vigilant against the proceeds of crime.

However, the study also found that many of the institutions surveyed were unable to track cross-border flows of dirty money and only half checked if clients were "politically exposed" or might present a heightened risk of corruption.

"This is definitely something which needs to be tightened up," Adam Bates, global chairman of KPMG Forensic, stated. "I don't think the regulators, or the public, are likely to find it amusing the next time a bank is found taking money from a corrupt general or political leader."

More than half of the banks questioned now have sophisticated IT systems in place, but 94 per cent still rely primarily on employees spotting discrepancies to trigger an investigation.