AML Compliance: Rising expectations bring rising costs
When Singapore announced last week that it would revamp and strengthen its AML Compliance and enforcement system, there likely was still a sting from its shutdown of BSI Bank due to alleged egregious AML behaviors related to Malaysia’s 1MDB fund.
But the Singapore central bank, known as Monetary Authority of Singapore (MAS), was also reacting to a larger regional and global problem of transnational money laundering and financial crime. And as a major financial center for Southeast Asia, Singapore has a major interest in protecting the AML reputation of its financial systems.
In a statement announcing its AML overhaul, MAS said that “the increasing complexities of transnational flows necessitates heightened supervisory focus on combatting money laundering and other illicit financing activities.”
Banks elsewhere in Asia are feeling this pinch as well, and a story this week in The Business Times estimates that Asian banks are spending about $1.5 billion per year on their AML Compliance efforts. The story featured data from a LexisNexis survey of AML Compliance efforts by banks in the region.
The biggest expenses, according to respondents, were in CDD/KYC due diligence and watchlist and sanctions screening. According to survey analysis, a significant part of these expenses are due to reliance on personnel more so than AML software solutions that automate a lot of the KYC/CDD due diligence and the sanctions screening.
AML Partners CEO Frank Cummings said that transitioning to AML software solutions can seem like a big undertaking at first but that his customers marvel at the quality and efficiency of AML Compliance enhanced by technology.
“This is a time of great transition in AML Compliance,” Cummings said. “These survey results—along with the overhaul of AML Compliance in Singapore—show that stakes are tremendously high in terms of combatting money laundering and terror financing. Given enforcement actions and the international consequences of a region’s reputation for AML/CTF Compliance, you’ve got to get this right.”
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