The global accountancy firm of KPMG has conducted a large survey of global financial firms. The results show steady progress towards globally-standardised AML policies, which two-thirds of firms now follow.

The global accountancy firm of KPMG has conducted a large survey of global financial firms. The results show steady progress towards globally-standardised AML policies, which two-thirds of firms now follow.

317 respondents from 48 countries participated in this year’s survey. Roughly one-third of them were heads of their companies' anti-money-laundering departments; one-fifth were senior managers; just over one-fifth were internal auditors; and most of the others were managers of some description. Just over one-quarter were from Western Europe, with the same figure for Asia-Pacific; One-fifth were from the Middle East and Africa; 8% were from North America; 11% were from Russia and Eastern Europe; and 8% were from Latin America. One-fifth of them came from institutions that offered wealth management services along with many others. Pure private banking and asset-management accounted for one-tenth of the total apiece; 14% were from insurance; and 2% were from fiduciaries.

Money-laundering 'issues' are moving back up the agenda for senior managers according to KPMG, with 88 percent of respondents saying that money-laundering is a senior management priority. The costs associated with AML compliance continue to rise at an average rate of 53% (presumably per annum) for banking institutions, exceeding previous predictions of more than 40% in 2011. The heaviest new investment was in Latin America.

42% of survey respondents listed recruitment as the third largest investment in AML compliance. The survey indicates that the acquisition of proper specialists is exacerbated by the fact that there is a shortage in the market for what it calls "AML professionals," which is certainly the case in the UK, where firms are coaxing regulators from their jobs at ever-earlier stages in their careers to fill the yawning gap. The retention of skilful staff is also a problem, especially as large financial firms that operate on the world stage are changing their organograms from top to bottom. It does, however, state that regulators have also decided to "grow their inspection teams," which might provide a pool of recruitment for hungry firms. KPMG also expects - but has not yet observed - extra money having to be allocated to MLROs' "well-being, development and training."

Towards global centralisation

Global policies are now de rigeur for all who have a global presence, whereas a similar report from a decade ago revealed that nearly two-thirds of respondents had a global AML policy but half of them "undertook implementation at a local level," i.e. compromised.Today's report says: "A global approach has been adopted in the majority of cases, but there is room for improvement. Only 32% of the 95% of respondents who have a global policy are able to maintain global consistency across subsidiaries and branches." Two-thirds of respondents stated that they applied the same AML policies and procedures to all branches and subsidiaries.

"Politically-exposed persons" are rising in importance in the eyes of senior managers, although they were never far from their thoughts in previous years. 82% of respondents said that senior managers were involved in the sign-off process - a Financial Action Task Force Requirement and a Wolfsberg Committee requirement before that.

No joking, Sherlock

With the far-from-startling revelation that "know-your-customer continues to be an area of concern," KPMG reveals that 70% of respondents have been subject to a regulatory visit that concentrated on their KYC controls. It does not give the time-frame but presumably this is in the last year.

68% of respondents stated that they obtained full identification of "intermediate owners and entities," which is a kind way of saying that they did not go as far as humanly possible when trying to sniff out the identity of the beneficial owners of complex structures. The accountancy firm airily stated that it expected an increase in "this practice" over the next three years. The places that did the worst in this area were Russia, Central and Eastern Europe and Latin America. To the question "Which of the following changes would you recommend making to the AML requirements imposed on your business?" a consistent third pointed to a different style of regulatory visits and/or assessments.

Between one-third and one-half cited "increased guidance" - probably not a Swiss favourite but very desirable in offshore locations.