By Andy Sambidge
New anti-money laundering survey says political unrest in region continues to pose challenge for financial institutions
The Middle East needs to do more to reduce its vulnerability to financial crime, according to KPMG's Global Anti-Money Laundering (AML) Survey 2014
While the UAE and other Gulf states are striving to improve regulation and legislation, the survey said political unrest in the wider region continued to pose a challenge for financial institutions.
The survey 2014 revealed the growing importance of AML globally and in the region, with regulatory fines now running into billions of dollar
The survey also highlighted the continuing need in the wider Middle East to reduce the region's vulnerability to financial crime, and how countries including the UAE are taking measures to implement tougher systems.
Nearly 90 percent of participants said that AML has emerged as a key area of focus for senior management. The survey drew 317 respondents from AML-related professional backgrounds from across 48 countries
It said the financial services industry in the UAE was making "significant changes", adding that, recently, the UAE announced changes in its key money laundering legislation.
But the survey said that while the profile of AML within the Middle East region has risen over the last three years, it still faces "some significant challenges around compliance, especially with regard to customer due diligence, transaction monitoring, and politically exposed persons (PEPs) identification.
"At present, a major concern for the Middle Eastern banks in the AML and the customer due diligence technology space is a lack of data consistency," it added.
Kauzal Ali Rizvi, director Consulting, KPMG Lower Gulf said: "As a rapidly developing region, the Middle East needs to take a more proactive approach towards reducing its vulnerability to financial crime and create infrastructure which will facilitate effective AML enforcement. The AML Survey indicates that 92 percent of respondents considered AML a high risk area.
"Furthermore, the political and civil unrest in the Middle East continues to pose a challenge for financial institutions' sanctions screening systems in terms of responding to rapid changes to sanctions lists and their increased volumes.
Globally, 78 percent of survey respondents reported increases in their total investment in AML activity, with 74 percent also predicting further increases in AML investment over the next three years.
Banks surveyed in Middle East and Africa indicated that the three main concerns on their AML agenda are the lack of qualified resources (76.6 percent), the pace and impact of regulatory change (72.3 percent) as well as the lack of overall training (72.3 percent).
When asked about the changes recommended to the AML requirements imposed on businesses, 56 percent of respondents in the Middle East and Africa stated that they would like to see increasing international cooperation to facilitate consistency of approach.
KPMG said the responses to the survey indicate that financial institutions operating in the region would like their regulatory authorities to become more involved in the globalisation of AML standards, learning from their counterparts in other countries to improve the regulatory approach in this region.