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Financial Fraud Law

Increased Executive Focus On Money Laundering Swells Workload For Compliance Staff

 Compliance departments are coming under increased pressure to strengthen anti-money laundering compliance because of a growing focus from senior management, but they are hampered in their efforts by a lack of training and resources, according to a joint Dow Jones Risk & Compliance/Association of Certified Anti-Money Laundering Specialists (ACAMS) survey released today. 

Survey respondents also pointed to new or increased enforcement of regulation and expansion into new markets as factors contributing to their increased workload. Of the more than 600 compliance and anti-money laundering staff surveyed worldwide, 55 percent identified additional regulations and/or increased enforcement as their key challenges over the coming year. Over 60 percent identified staffing and/or training shortfalls as significant challenges. The false positives that arise from screening existing or potential clients against international sanctions and watch lists were also identified as a key challenge, cited by a third of the respondents.  Every occurrence of a client record matching to a name on a sanction, PEP or risk list has to be investigated; the processing of false positives costs institutions time and manual effort to handle and research.
“Companies are coming under increasing pressure to meet enhanced anti-money laundering regulations at a time when staffing and resources are scarcer than ever,” said Rupert de Ruig, managing director of Risk & Compliance, Dow Jones & Company. “The survey highlights the fact that institutions are stretched operationally and struggling with the workload generated by their client screening systems. A significant proportion of the respondents also reported that they have little confidence in the accuracy of their screening data and said they do not proactively test the accuracy of the information they receive from data providers.”
“The increase in the size of watch lists in recent years has added significantly to the workload, which may become overwhelming, leading to mistakes and potential regulatory exposure if these issues are not addressed,” added de Ruig.
Other key findings from the survey include:
O         More than 40% of anti-money laundering staff attribute increased workload to expansion into new markets -
 “The expansion into new markets is a result of companies looking for new opportunities in the aftermath of the global financial crisis,” said De Ruig. “It’s positive news that organizations are still expanding, but growth into some jurisdictions can bring new risk.”
O         False positives are still an area of concern -
Nearly 45% of those surveyed said the majority of the alerts they receive from client screening are low-level matches or false positives. Clearing false positives consumes valuable resources that could be spent on other business. Moreover, true alerts that can result in fines, custodial sentences and damage to a company’s reputation can be missed when companies respond to large numbers of false positives.
O         Data quality is key, but few are confident in its accuracy -
Because of the significant levels of false positives experienced, more than a third of respondents indicated that they don’t have confidence in the accuracy of the data they are using. A further 30% said they’ve never reviewed the quality of data for client screening, fraud, sanctions or transaction filtering.
O         Screening for domestic Politically Exposed Persons (PEPs) has already begun -
Despite a lack of regulation around domestic PEPs (almost all regulation around the world specifies that domestic PEPs are exempt from screening), nearly 80% of those surveyed said they are already screening domestic clients and third parties against PEP lists as an added precaution.
Over 600 people, representing regulated companies and regulators from across the globe, responded to the survey, which was undertaken in July 2011. Respondents came from various roles including Chief Compliance Officers, Compliance Directors, Compliance Officers and Vice Presidents of Anti-Money Laundering.