Deloitte, 18th Nov 2020 - The Anti-Money Laundering Preparedness Survey Report 2020 has been released by Deloitte Touche Tohmatsu India LLP (DTTILLP) to understand the utility of AML compliance and ways to improve it. The survey took place across the leading banks and FIs in India, Sri Lanka, and Bangladesh between January and March 2020 to understand the level of preparedness of banks in South Asia to meet the regulatory requirements and the challenges present in the AML compliance programmes. The survey focused on many areas such as AML governance framework, customer due diligence, sanctions screening to understand the challenges and problems faced by banks leading to fraud.

Though 81% of respondents believed that their Anti Money Laundering programmes were compliant with regulatory expectations, they felt that meeting the future expectations of regulatory compliance can be difficult. The challenges, according to respondents, can range from reliance on manual processes to recruiting skilled staff while maintaining an AML compliance programme.

Institutional Risk Assessment (IRA) is a key element of the risk-based approach (RBA) that is required for effective implementation of AML systems. IRA helps banks and FIs understand the vulnerabilities posed by money-laundering risks. According to the survey, although 87% of the respondents indicated having adopted an enterprise-wide approach to AML risk management, the efforts have been siloed as organizations stay focused on separate risk assessments rather than an integrated one.

The survey respondents pointed out technology-related issues such as a lack of data accuracy, increased false positives, incomplete coverage of processes, and insufficient data, along with people-related problems. These technological limitations and limited capabilities directly affect the efficacy and functioning of the AML compliance programme.

Respondents mentioned that in current screening solutions, the factors that affected the confidence include data structure issues, poor integration, negative alerts, etc. Customer due diligence should be, according to 64% of respondents, an important focal point to improve AML compliance in the future. 51% of respondents indicate that control effectiveness and sustainability should also be an area of focus for the improvement of the AML compliance programme.

Money laundering is a prevalent fraud risk that the government, banks, and FIs must address and tackle quickly. With the adoption of online payments and digital transactions that have accelerated during the Covid 19 pandemic, there are new emerging risks that need to be accounted for in the Anti-money Laundering (AML) compliance. Banks, regulators, and the government must improve the AML compliance efforts and ways to counter the money laundering risks.

Check Deloitte AML Preparedness survey report here: https://www2.deloitte.com/in/en/pages/finance/topics/forensic/aml-preparedness-survey-report.html