U.S. Financial Institutions Increasing Budgets, Training to Combat Money Laundering

U.S. financial institutions will continue to spend at a brisk pace to combat money laundering over the next three years, with some banks expecting costs to more than double during the period, according to a new survey by audit, tax and advisory firm KPMG LLP.

"KPMG's survey indicates that costs will rise, in part, because of transaction monitoring required by federal law, and we're finding that most financial institutions have a strong resolve to meet these standards by implementing an efficient monitoring system that, with hope, can help thwart terrorism globally," said Ellen Zimiles, a partner in KPMG's Forensic practice.

"Because this is a matter of both regulatory compliance and homeland security, U.S. financial institutions are heeding a clear message: Be more accountable or risk stiff consequences," she said.

Among the key findings of KPMG's survey are:

  • Encouragingly, a vast majority of respondents agree that the overall "burden" to keep up with new anti-money laundering regulations is acceptable, and they want to work with regulators and law enforcement to make the system operate more effectively.
  • The majority of anti-money laundering budget increases, in order of priority, will go toward transaction monitoring, staff training,
    external reporting requirements, and account-opening procedures.
  • The cost of anti-money laundering compliance rose significantly over the past three years. Eighty-four percent of executives worldwide and 94 percent in the United States reported that costs have increased as much as 100 percent since passage of the USA PATRIOT Act.

"Perhaps the biggest challenge for U.S. financial institutions is to install a more accountable anti-money laundering system without imposing upon and diluting service to clients and potential customers," Zimiles said.

Zimiles added that it is encouraging to see a majority of financial- services institutions, especially upper management, embrace their anti-money laundering responsibilities. "It is also encouraging to see those that use anti-money laundering compliance information to support other processes, such as customer profiling and fraud prevention," she said.

Officials at both the International Monetary Fund and The United Nations Office of Drug Control Prevention estimate that between $500 billion and $1 trillion in funds is laundered worldwide annually by drug dealers, arms traffickers, terrorists and other criminals.


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