Anti-money Laundering Compliance: Five Statistics You Should Be Aware Of
Money laundering is one of the biggest challenges facing the modern organization. Proactive identification of risks posed by customers and consistent monitoring of all financial activities are essential to ensure that compliance programs align with regulatory expectations and requirements.
In this article, we will explore some of the key statistics of a 2014 Global Anti-Money Laundering survey. It provides a comprehensive overview of the state of anti-money laundering (AML) and the new challenges it presents for the modern organization.
1. 88% of organizations stated that AML is a major priority for senior management.
And well, it should be. Money laundering, though it has always been there, is now a bigger threat than ever before. Advances in technology in particular have enabled criminals to disguise the proceeds of illegal activities as legitimate money. This can quite easily be filtered through financial systems and be recovered as ‘clean’ money as it comes out on the other side.
It is estimated that between $500 billion and $1 trillion of dirty money is laundered each year. Consequently, global organizations have to be extra vigilant in their anti-money laundering efforts.
2. 88% of organizations feel that the impact of regulatory changes were one of the most significant challenges to their operations.
Regulatory changes have an enormous impact on corporate compliance. The frequency of changes to existing legislation and the introduction of new laws mean that organizations are forced to update their compliance programs on a regular basis, which means ongoing investment of time and money. Compliance training, for example, has a major part to play, particularly in financial services, as employees at all levels must have an awareness and understanding of the risks associated with money laundering.
3. The average cost of anti-money laundering compliance programs rose by 53% for banking institutions, exceeding predictions of over 40%, in 2011.
The cost of anti-money laundering is a big challenge for most organizations. This statistic highlights the scale of spending on money laundering compliance programs alone with a 13% increase on the expected level of spending. Money laundering tactics are becoming more advanced. This requires increased investment in tightening up compliance programs and in the resources required to combat the increased threat of money laundering and other fraudulent activities. Transaction monitoring systems; KYC reviews, updates, and maintenance; and compliance recruitment are cited as three of the biggest areas where money is being spent.
The survey also confirmed that 74% of organizations expect costs to rise even further over the next three years.
4. 86% of front office staff receive AML training but only 62% of senior management and executives receive it.
Effective training is an essential weapon in the fight against money laundering. Yet the above statistic sends a clear message to us – there is an inconsistent approach to training of non-AML staff.
Senior management should set the tone for other staff. Training for senior staff is vital, not only for awareness of best AML practices, but also because it provides an organization’s leadership with the ability to better understand and quantify the risks of being exposed to financial crime at both the business and client level.
Consistency in training is key and without it, an organization risks being exposed to considerably higher risks.
5. 70% of organizations have been the subject of a regulatory visit that focused on the area of KYC.
Knowing your customer is everything. And the importance of a risk-based approach when dealing with new customers cannot be overlooked. This is why employees at every level of an organization, but particularly front line employees, require high-level training to allow them to screen new customers effectively and protect their businesses from money laundering and other risks.
Do your organization’s compliance programs align with current anti-money laundering regulations?
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