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RISKCONSULTINGGlobalAnti-MoneyLaunderingSurvey2014kpmg.comAML KPMGnamedGlobalAMLrmoftheyear2014OutstandingAMLadviceisaboutunderstandingtherisksanddevisingaproportionateresponse.OurmemberrmsAMLteamspridethemselvesontheirpracticalexperienceofimplementingAMLprogramsatmajorinstitutionsbothasemployeesandasadvisors.Wehavealsoundertakensomeofthelargestinternationalremediationandlook-backexercisesinrecentyears.Thelessonswevelearnedcoupledwithourtrackrecordworkingatandwithregulatorsallowustounderstandwhatmeetscompliancestandardswhilstalsomakingcommercialsenseforyou.ThatwayyoucankeepyourAMLriskssafelylockedaway.ContactustondoutmoreBrianDilleyKPMGsGlobalHeadofAMLServicesFormerlyGlobalHeadofAMLatUBSInvestmentBankandHeadofDepartmentintheFSAsEnforcementDivision4402078964843brian.dilleykpmg.co.ukTeresaPesceKPMGsHeadofAMLServicesfortheAmericasRegionFormerlyHeadofAMLforHSBCNorthAmericaandChiefoftheMajorCrimesUnitDeputyChiefoftheCriminalDivisionUSAttorneysOfceSouthernDistrictofNewYork12128726272tpescekpmg.comKyranMcCarthyKPMGsHeadofAMLandSanctionsServicesfortheAsiaPacicRegion.Hehasmorethan18yearsexperienceinnancialadvisoryservicesspecializinginAMLandSanctionsservices.85221402286kyran.mccarthykpmg.comEnricOlcinaKPMGsHeadofAMLServicesfortheEuropeMiddleEastandAfricaRegion15yearsexperienceprovidingAMLandfraudpreventionservicestoleadingEuropeannancialinstitutions34932532985eolcinakpmg.eskpmg.comAML2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberrmsoftheKPMGnetworkareafliated.TheKPMGnamelogoandcuttingthroughcomplexityareregisteredtrademarksortrademarksofKPMGInternational.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. ForewordNewFocusAreasConcludingRemarksRegionalCommentaryDetailedSurveyFindings0240TradenanceshouldmakebetteruseoAMLresources40TaxevasionandFATCAcomplianceremaintaxing42Assetmanagementsectorresultsrefectchangingattitudes44Insurancesectoralignswelltooverallndings464850ContentsIntroductionandMethodology04Respondentprole06Keyheadlines0708Seniormanagementocusisontheriseagain08Costocompliancecontinuestobeunderestimated13Trainingandrecruitmentinitiativesneedagloballyconsistentapproach17Outsourcingando-shoringaregrowingtrendsdespiteseniormanagementconcerns18Transactionmonitoringcostscontinuetosoarassatisactiondeclines21KnowYourCustomercontinuestobetheocusoregulators25PoliticallyExposedPersonsPEPscontinuetoleaveorganizationsexposed29Sanctionscomplianceshowssignsoimprovementbutstillasorespot32Regulatoryapproachisragmentedandinconsistent362014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 2ForewordItis10yearssincewereleasedourfrstGlobalAnti-MoneyLaunderingAMLsurvey.Duringthose10yearsfnancialinstitutionshaveriddenthehighsandplungedtothelowsotheeconomiccycle.DespitethesedramaticchangesinthebusinessenvironmentAMLhasremainedakeyocusareathroughout.InactAMLhasneverbeenhigheronseniormanagementsagendawithregulatoryfnesnowrunningintobillionsodollarsregulatoryactionbecominggenuinelylicensethreateningandthreatsocriminalprosecutionagainstbanksandindividuals.FinancialInstitutionsaremakingsignifcantchangesinresponsetoregulatoryactionandincreasinglyar-reachingglobalAMLregulationswithnumerousnewregulationsacrossAsiatheU.S.ForeignAccountTaxComplianceActFATCAhavinganimpactandtheFourthEuropeanMoneyLaunderingDirective4MLDstilltocome.TheseinitiativeshavequicklychangedtheAMLsceneromastandaloneunctionundercompliancetoanincreasinglycomplexandoverarchingunctioncuttingacrosslegalriskoperationsandtax.StrongAMLprocessesandcontrolsareattheheartointer-dependenciesandlinkageswithinaglobalorganizationoeringinvaluableclientknowledgethatisonlyrecentlystartingtobeleveragedbyotherdepartmentsaswellasseniormanagement.ButquestionsarenowbeingaskedastowhetheritispossibleoraglobalinstitutiontorunaullycompliantAMLprogram.DespiteannualexpenditurethatislikelytoexceedUS10bninthenextcoupleoyearsinstitutionscontinuetoallouloregulatoryexpectationswhichseemtochangemoreregularlythaninthepast.Minimumcompliancewithregulatoryobligationsisnolongerenoughtostayoutotroublewhenyoustrivetomeetahigherstandardbutail.ThissurveynotonlycomparesfrmsAMLprogramsovertheperiodcoveredbypreviousKPMGsurveysbutalsolooksatemergingareasorisksuchasTradeFinanceandTaxEvasionaswellaslookingatAMLtrendswithintheInsuranceandAssetManagementsectors.Thelattersectorshavereceivedrelativelylessocusromregulatorsbutthatisnowchangingasregulatorsbroadentheirpurview.Wewouldliketothankthe317surveyrespondentswhotookthetimetoparticipateinthisyearsGlobalAnti-MoneyLaunderingsurvey.WearedelightedtosharetheresultsaccompaniedwithourownglobalandregionalinsightromKPMGmemberfrmproessionals.JeremyAndersonChairmanGlobalFinancialServicesBrianDilleyGlobalHeadoAnti-MoneyLaunderingServices2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 32014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 4TheoverarchingaimsothisyearsglobalAMLsurveyincludeIdentifyingemergingtrendsopportunitiesandthreatsCapturingindustryperceptionsonregulationcostandeectivenessandBenchmarkingAMLeffortsinthefnancialservicesindustry.Inadditiontothetopicscoveredinourprevioussurveysthe2014surveyalsoaskedrespondentstoconsidermoneylaunderinginrelationtotheollowingTradeFinanceFATCAandTaxEvasionInsuranceSectorAssetManagementSectorIntroductionandMethodologyKPMGlauncheditsonlinesurveyinNovember2013.ThesurveywasdistributedtoAMLandcomplianceproessionalsinthetop1000globalbanksaccordingtothe2013editionoTheBankerMagazineaswellastoKPMGsAMLcontactsinover40countries.SourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.PortugalUSALuxemburgMexicoCanadaIrelandAustriaBermudaBrazilRespondentscamefromthefollowingcountries2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 5KuwaitUAEThailandSwedenSpainSouthAfricaSingaporeSaudiArabiaRussiaQatarPolandNewZealandSwitzerlandUKKenyaLatviaMaltaNetherlandsMalaysiaHongKongIndiaItalyJapanJordanDenmarkFranceGermanyGhanaGreeceIndonesiaAngolaAndorraArmeniaAustraliaZimbabweSlovakia2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 6Jobtitle37231613416HeadofAMLHeadofDepartmentotherthanAMLInternalAuditorDirectorManagerOfcerOtherGeographicalareaofresponsibility22782611188WesternEuropeNorthAmericaAsiaPacicCentralandSouthAmericaRussiaCentralandEasternEuropeMiddleEastandAfricaOffshorelocationsTypeofbusiness1412621228103310RetailbankingCorporatebankingPrivatebankingInvestmentbankingAssetmanagementInsuranceMultiplebankingservicesAlloftheaboveFiduciaryserviceproviderOtherSourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.SourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.SourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.317respondentsparticipatedinthisyearssurveyrepresenting48countries.RespondentscameromawiderangeoAML-relatedproessionalbackgroundsacrossthefnancialservicesindustry.AurtherbreakdownorespondentproflebyregionsectorandjobtitleisprovidedbelowRespondentprofle2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 72004200720112014PriorityorseniormanagementAMLwasarelativelyhighprioritywithinbanks.Sixty-onepercentorespondentbelievedAMLwasahighprofleissueortheirseniormanagement.StrongerseniormanagementengagementinAMLeorts.Seventy-onepercentorespondentsstatedthattheirboardtookanactiveinterestinAML.Seniormanagementinterestdeclinedbutremainedquitehighwith62percentorespondentscitingAMLasahighprofleissue.AMLissuesaremovingbackuptheagendaorseniormanagementwith88percentorespondentssayingAMLisapriorityorseniormanagement.CostocomplianceThecostoAMLcomplianceincreasedsharply.Theaverageincreaseoverthepreviousthreeyearswas61percentwithnorespondentsreportingadecreaseininvestment.AMLcostsgrewbeyondexpectation.Averagecostsgrew58percentinthepreviousthreeyearscomparedtoapredictiono43percentgrowthin2004.Costscontinuedtoriseatanaveragerateo45percentagainstapredictionoover40percentin2007.Theextentocostrisesappearedunderestimatedbymany.Costscontinuetoriseatanaveragerateo53percentorbankinginstitutionsexceedingpreviouspredictionsoover40percentin2011.TakingaglobalapproachEstablishingaglobalpolicywasamajorchallenge.Nearlytwo-thirdsorespondentshadaglobalAMLpolicyinplacehoweverhalotheseundertookimplementationatalocallevel.BankstookamoreglobalapproachtomanagingAMLrisk.Eighty-fvepercentointernationallyactivebankshadaglobalAMLpolicyinplace.Therewasmuchvariationinapproach.Two-thirdsobankshadaglobalpolicyinplacehoweveralmostthreequartersimplementedtheirprocedureslocallyAglobalapproachhasbeenadoptedinthemajorityocasesbutthereisroomorimprovement.Only32percentothe95percentorespondentswhohaveaglobalpolicyareabletomaintainglobalconsistencyacrosssubsidiariesandbranches.PoliticallyexposedpersonsPEPswerenotakeyareaoocuswithonly45percentrespondentsperormingenhancedduediligenceonPEPsataccountopeningstage.TherewasmoreocusonPEPs.Eighty-onepercentorespondentsperormedenhancedduediligenceonPEPsataccountopeningstage.PEPswereanareaoocusoralmostallrespondentswith96percentusingPEPstatusasariskactorand88percentmonitoringPEPsonanongoingbasis.PEPsremainanareaoocusgainingincreasedattentionromseniormanagement.Eighty-twopercentorespondentssaidthatseniormanagementisinvolvedinthesignoprocess.KnowYourCustomerBanksincreasinglyunderstoodtheimportanceoAMLcomplianceorexistingandnewcustomers.Seventy-ourpercentorespondentsremediatedinormationgapsorexistingcustomersevenitakenonbeorenewKYCrulesorguidance.Bankscontinuetouseremediationprogramstobackfllcustomerdata.Therewasaslightbutnotsignifcantincreaseinthenumberobanksengagedinaremediationprogramwith77percentobankshavingaremedialplaninplace.KYCinormationwasrereshedbyalmostallinstitutionsbutnotconsistentlyacrossregions.Ninety-threepercentorespondentshadaprograminplacetoremediateinormationgapsbuttheapproachvariedgreatly.FATCAwasthegreatestimmediateKYCchallenge.KYCcontinuestobeanareaoconcernwith70percentorespondentsstatingthattheyhadbeensubjecttoaregulatoryvisitocusingonthisarea.SanctionscomplianceNotcoveredinsurvey.SanctionscomplianceisnowamajorchallengeandsourceoAMLinvestmentduetoincreasedregulatoryocus.However20percentobanksdidnothaveanyproceduresinplacetoupdateprincipalinormationorthepurposesosanctionscompliance.Sanctionscomplianceremainedachallengewithclientscreeningseenasthemostdifcultarea.Seventy-ourpercentorespondentsidentifedalldirectorsandcontrollers.Worryinglyonly50percentusedthenewMT202COVSWIFTmessage.Sanctionscomplianceremainsachallengeasnewissuesemerge.Seventy-fvepercentorespondentsnowuseMT202COVSWIFTbutonly52percentorespondentsindicatedthatineveryinstancewhereaMT202COVlackedrequiredinormationitwouldberejected.TransactionmonitoringEnhancedtransactionmonitoringsystemswasthemainareaoincreasedAMLspendingbutnotuniversally.Sixty-onepercentobanksuseinternallydevelopedsystemswith45percentusingthosedevelopedexternally.However22percentusedneither.PeoplearestillthefrstlineodeenceinthefghtagainstmoneylaunderingdespiteitbeingthegreatestareaoAMLinvestment.Ninety-sevenpercentorespondentsstillreliedprimarilyontheirpeopletospotsuspiciousactivity.Satisactionwithsystemsisneutralatanaverageo3.7outo5.Questionswerestartingtoberaisedabouttransactionmonitoring.Overallrespondentssatisactionwithtransactionmonitoringremainedneutralatanaveragescoreo3.6outo5butmanyregionswerelesssatisfedthanin2007.ItwasstillthegreatestareaoAMLspending.TransactionmonitoringsystemscontinuetorepresentthegreatestareaoAMLspendingwhilesatisactionorthesesystemshasdeclinedwithanaveragescoreo3.42outo5withregardstoefciencyandeectiveness.RegulatoryapproachTheregulatoryAMLburdenwasacceptablebuttherequirementscouldbemoreeective.Eighty-ourpercentorespondentsbelievedtheburdentobeacceptablebut54percenteltthatitcouldbemoreeective.TherewasbroadsupportorregulatoryAMLeortsbutalsomoretodo.Ninety-threepercentorespondentsthoughttheregulatoryburdenwaseitheracceptableorshouldbeincreasedhowever51percentsaiditcouldbebetterocused.Regulatorswereactivebutbankswantedmorecollaborationandinormation.Eighty-fvepercentobankseelthattheoverallleveloregulatoryburdenisacceptablebutmanywantedmoreguidanceandacollaborativeapproach.RegulatoryapproachwasrankedasthetopAMLconcernwith84percentorespondentsstatingthepaceandimpactoregulatorychangesassignifcantchallengestotheiroperations.Keyheadlines2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 8DetailedsurveyfndingsEighty-eightpercentorespondentsstatedthattheBoardoDirectorstakesanactiveinterestinAMLissuesthisisanincreaseo26percentromour2011result.GiventheimpactthatAMLcompliancecanhaveonthereputationsharepriceandeconomicviabilityoafnancialinstitutionthisisnosurprise.InaperiodoheightenedregulatoryscrutinyandcontinuingglobalizationoAMLregulationorganizationsareacedwithgreaterchallengestoachievingandmaintainingAMLcompliance.Althoughinanumberoregionsthenumberofneshasdeclinedtheamountoeachfnehasincreasedsignifcantlyhighlightingtheregulatorscontinueddeterminationtopreventillicitactivityandplacingrealpressureoncomplianceexecutivestopreventurtherailings.Signifcantly98percentorespondentsconfrmedthatAMLissuesarediscussedormallyattheBoardwiththemajoritystatingthatthiswasdoneonaquarterlyorasrequiredbasis.ThegreaterinvolvementotheBoardoDirectorsisinnosmallpartduetoincreasingandevolvingregulatorypressuresandtheexpectationsthataBoardmembershouldhaveresponsibilityormaintainingeectiveAMLcontrols.Insomejurisdictionstheprospectoindividualsbeingcriminallyprosecutedhasbecomeareality.OvertheperiodothiseditionothesurveytheintroductionotheFATCAandtheproposalsorkeyregulatorychangessuchas4MLDsuggestingthatseniormanagementsattentioncontinuetoincreaseimplementation.SeniormanagementinterestinAMLcompliancehasincreasedagainsincethedeclineduringthefnancialcrisiswithmoneylaunderingrisksgivenregularandormalattentionatBoardmeetings.RegulatorshavecertainlydonetheirpartinraisingtheprofleoAMLwithnoshortageofnesbeingissuedorailurestomaintainadequateAMLcontrolsandplacingpressureonseniormanagementtopreventurtherailings.Seniormanagementocusisontheriseagain2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 9TheBoardofDirectorstakeanactiveinterestinAMLissues3949930StronglyagreeAgreeNeutralDisagreeStronglydisagreeEighty-fourpercentrespondentsstatedthatmoneylaunderingisconsideredahighriskareawithintheirbusinessriskassessmenturtheremphasizinghowseriouslyseniormanagementdeemsailurestomeettheregulatoryrequirements.RegionswithmoredevelopingcountriessuchastheMiddleEastandAricaAsiaPacifcandCentralandSouthAmericahaveneededtotakeamoreproactiveapproachtoreducetheirvulnerabilitytofnancialcrimeandcreateaninrastructurewhichwillacilitatetheeectiveenorcementotheireverevolvingAMLstandards.Thisisevidencedinoursurveyresultswith100percentorespondentsinCentralandSouthAmericastatingthatAMLishighriskand92percentinAsiaPacifcMiddleEastandArica.SourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 10ExposuretomoneylaunderingisconsideredahighriskareainyourbusinessriskassessmentStronglyagreeAgreeNeutralDisagreeStronglydisagree646282MiddleEastandAfrica8020CentralandSouthAmerica25817842NorthAmericaSourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 11215411144647523350116OffshorelocationsRussiaCentralandEasternEurope33171445WesternEurope2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 12HowchallengingrespondentsconsiderimplementingagloballyconsistentAMLrameworkwith1representingleastchallengingand5asmostchallenging.Seventy-fvepercentorespondentsstatedthatthesameAMLpoliciesandproceduresareappliedtoallbranchesandsubsidiariesdemonstratingthatseniormanagementistakingamoreglobalapproachtoAMLcompliance.RespondentsalsostatedthatimplementingagloballyconsistentAMLrameworkisverychallengingscoringit3.67outo5askeydierencesinnationallegislationanddataprivacystandardsmakeitchallengingtoimplementgloballyconsistentstandards.Regulatorshavecriticizedorganizationsoraailuretoconsistentlyimplementandapplytheirpoliciesandprocedures.SeniormanagementcannotunderestimatetheimportanceoestablishinganeectiveandconsistentlyappliedAMLcomplianceramework.Theaveragerateoincreasegloballywas53percentcomparedtoapredictiono40percentin2011.KPMGInsightAsmanagementattentioncontinuestobepulledinmultipledirectionstherearemanywhoeelthatitisnolongerpossibletomeetallregulatoryexpectations.TheAMLburdenplacedonseniormanagementtimewillcontinuetoincreasemakingitmorechallengingthanevertomeettheregulatoryrequirements.Boardmemberswillneedtoconsiderhowtheywillmanagetheadditionalpressuresontheirtimewhilestillulfllingtheirdutiesocareskillanddiligence.AppointingaBoardmemberwithresponsibilityorAMLisnolongeranicetohave.SeniormanagementneedtoconcentrateonestablishingstrongAMLassurancemechanismsandgloballyconsistentprocedurestoavoidcensureandpossibleprosecution.SourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.0.00.51.01.52.02.53.03.54.04.55.03.673.42201420112014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 13ThecostoAMLcompliancehasincreasedsinceourlastsurveyandshowsnosignsoslowingdowninthenearuture.Accuratecostorecastingisvitalormembersoseniormanagementtomakeinormeddecisionsbutitremainsakeyareaoweakness.In20118percentofrespondentspredictedanover50percentincreaseinexpenditure.Inreality22percentofrespondentsincreasedexpenditurebyover50percentduringthethreeyearperiodfrom2011.ItisnotuncommonorsurveyrespondentstounderestimatetheincreaseinAMLexpenditureithasbeenaconsistentthemeoverallourooursurveys.AlthoughthereasonsbehindthisremainunclearitmayberelatedtotheactthatAMLpractitionersaswellasseniormanagementdonotanticipatetheannouncementsoregulatorychangesnorthespeedinwhichnewregulationsareexpectedtobeimplemented.Seventy-eightpercentofsurveyrespondentsreportedincreasesintheirtotalinvestmentinAMLactivitywith74percentalsopredictingfurtherincreasesinAMLinvestmentoverthenextthreeyears.ThemostsignifcantincreaseininvestmentoccurredintheAPACregionwhere39percentorespondentsreportedover50percentincreaseinAMLinvestment.Theaveragerateoincreasegloballywas53percentcomparedtoapredictiono40percentin2011.CostofcompliancecontinuestobeunderestimatedSourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.HowmuchhastotalinvestmentinAMLactivityincreasedcomparedtothreeyearsago1211124161512DecreaseNochangeinrealtermsLessthan1010to2525to5050to100Over1002014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 14AnticipatedincreaseinAMLinvestmentoverthenextthreeyears.16753231432DecreaseNochangeinrealtermsLessthan1010to2525to5050to100Morethan1004235592335EnhancingtransactionmonitoringsystemsReviewingupdatingandmaintainingKYCRecruitmentProvisionoftrainingImplementationofFATCAProceduralupdatesMaintainingsanctionlistsIncreasinginternalreportingrequirementsAnti-briberyandcorruptionactivitiesTransactionlook-backreviewsOther4AreasofAMLbudgetinvestment811122560SourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.SourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 152014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 16SixtypercentofsurveyrespondentsindicatedthattransactionmonitoringsystemsrepresentedthelargestAMLinvestment.Financialinstitutionsarespendingsignifcantamountsotheirresourcesonautomatedtransactionmonitoringsystemsandmemberfrmsexperiencesuggeststhatclientsarebecomingincreasinglyunhappywiththeircurrentautomatedmonitoringeortslookingorsotwarethatcanreducetheburdenonthecompliancedepartment.Someothesesystemsareimplementedquicklyoutotheboxtosatisyregulatorsandonlylateraretheycalibratedtodetectrelevantsuspiciousactivity.Fifty-ninepercentofsurveyrespondentslistedKYCreviewsupdatesandmaintenanceasaccountingforthesecondlargestAMLinvestment.OngoingchangesinKYCstandardshavealsoledtoheavyinvestmentinthisareapredominantlyinCentralandSouthAmericawhere100percentorespondentslistedKYCasthelargestAMLinvestment.Recentregulatoryfndingssuggestthereisstillastruggleindeterminingwhatconstitutesadequatecustomerduediligenceandwhentoapplyenhancedduediligenceleadingtoinvestmentinlargescaleremediationprojectsandnotifcationoregulatoryvisitsorurtherinspection.ForthosethathavesolvedtheproblemoinitialKYCthechallengeisnowhowtokeepituptodate.Forty-twopercentofsurveyrespondentslistedrecruitmentasthethirdlargestinvestmentinAMLcompliance.Theresultsooursurveyindicatethatrecruitingadequatelyskilledresourcesremainsachallenge.HoweverthisproblemmaybeexacerbatedbytheactthatnotonlyisthereashortageinthemarketorAMLproessionalsbutretentionoskilledstaisalsoachallengeparticularlyaslargeglobalplayerslaunchmajorchangeprogramswhileregulatorsalsogrowtheirinspectionteams.Itcanbeexpectedthatinadditiontorecruitmentcostsfnancialservicesfrmswillneedtoreassesscostsassociatedwithsuccessullyretainingstaincludingadditionalinvestmentintheirwell-beingdevelopmentandtraining.3Recruitment2KnowYourCustomerKYCreviewsupdatesandmaintenanceThetop3areaswhereAMLbudgethasbeeninvestedare1TransactionmonitoringsystemsKPMGInsightInanenvironmentthathascontinuedtobeimpactedbythefnancialcrisisseniormanagementneedtobeaskingsomepressingquestionswhenitcomestoAMLinvestment.LargesumsomoneycontinuetobespentonimprovingtransactionmonitoringbutisthisyieldingtheexpectedreturnWhyisthereacontinuedneedtoundlargescaleKYCremediationexercisesIsthispurelytheresultoregulatorychangeoristheperiodicreviewprocessnotpickingupkeygapsinKYCWebelievethatseniormanagementwillcontinuetounderestimateAMLexpenditureunlesslessonsarelearntrompastmistakes.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 17EectivetrainingisvitalordevelopingandretainingAMLproessionalsaswellasensuringthesuccessulimplementationoanAMLramework.Thereappearstobeaninconsistentapproachtotrainingonon-AMLstaincludingtheBoardsoDirectorswhichisurtherexacerbatedbyregionaldiscrepancies.Only62percentosurveyrespondentsindicatedthattheBoardoDirectorsreceivesAMLtrainingwhichisnotashighaswewouldhaveanticipatedparticularlywhenBoardsaremoreinvolvedinAMLthaneverbeore.AllBoardsoDirectorsshouldreceiveAMLtrainingasaknowledgeableBoardoDirectorsisanessentialcomponentinthesuccessulexecutionoanAMLcomplianceramework.AdditionallyAMLtrainingprovidesleadershipwiththeabilitytobetterunderstandandquantiytherisksobeingexposedtonancialcrimeatboththebusinessandclientlevel.Eighty-sixpercentosurveyrespondentsindicatedthatrontofcestareceiveAMLtrainingreinorcingthatthegreatestexposuretomoneylaunderingrestswiththerontoce.HoweverthevariationbetweenAsiaPacicandtheAmericaswasairlymarkedorthisquestion.SeventypercentosurveyrespondentsromAsiaPacicspeciedthatAMLtrainingwasprovidedtomiddleoceunctionscomparedto90percentorespondentsinNorthAmerica.Aurther58percentorespondentsromAsiaPacicstatedthattheinternalauditteamreceivesAMLtrainingcomparedto100percentorespondentsinCentralandSouthAmerica.TheregionaldierencesintheprovisionoAMLtrainingrefectthehighlevelnatureoregulatorytrainingprovisions.TheclosestexampletoagloballyapplicablesetoregulatoryrequirementsinthisareamaybeintheFinancialActionTaskForceFATFprincipleswhichspeciythatrmsshouldprovideAMLtraininginlinewiththeirnationalgovernmentrequirementsbutdonotspeciywhichunctionsrequiresuchtraining.Asaresultthereisalargepotentialodivergenceinapproachwhichisrefectedinthesurveyresults.TrainingandrecruitmentinitiativesneedagloballyconsistentapproachKPMGInsightSeniormanagementareresponsibleorsettingtheriskappetiteotheorganizationandregulatorsexpectmanagementtosetthetoneromthetopwhenitcomestoAMLcompliance.InKPMGmemberrmsexperiencetrainingiskeywhenitcomestomakinginormedcompliancedecisionsandembeddingAMLawarenessintoanorganizationsriskcultureandwewouldthereorequestionthewisdombehindnotprovidingAMLtrainingtoallrelevantstamembersandinparticulartheBoardmembers.Inanincreasinglyglobalizedworldrmsshouldalsobequestioningtheeciencyandeectivenessotheircurrenttrainingmethods.Increasinglyclientsareusingcomputerbasedtrainingtoolstomaximizetheimpactandcosteectivenessotrainingpairedwithrole-specicclassroomtrainingorhigherriskroles.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 18Theoutsourcingandoff-shoringofAMLfunctionsisagrowingtrendTrueYesoshoringonlyYesoutsourcingonlyFalse1921519MiddleEastandAfrica255025CentralandSouthAmerica306010NorthAmericaOutsourcingando-shoringoAMLunctionsaregrowingtrendsbutrespondentsstillappeartohavereservationsaboutadoptingsuchpracticesduetoaperceivedlackocontrolandoversight.Thissuggeststhatinsomecasesearsoregulatoryfnesmayoutweighthecostandresourcebeneftsooutsourcingando-shoring.Outsourcingandoff-shoringaregrowingtrendsdespiteseniormanagementconcernsSourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 1926401123294712Offshorelocations245216128RussiaCentralandEasternEurope2713528WesternEuropeFiftypercentofrespondentsdonotexpectoutsourcingandoff-shoringtoriseinthefuture.Neverthelessthesefguresrepresentasignifcantdecreaseromourpreviousfndingsin2011where80percentorespondentsdidnotbelieveeitherothesewouldbegrowingtrends.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 20PleaserankeachareaintermsofhowchallengingtheimplementationofariskbasedapproachistoCDDcollection.3.395Obtainingtherequiredinformation3.305Meetingdifculttimescales3.065Inconsistentapproach4.185Identifyingcomplexownershipstructures2.965IncorrectlycategorizingriskTenpercentofrespondentsin2011statedthattheyoutsourcedandoroff-shoredsomeoftheirAMLfunctions.Howeverby201431percentofrespondentshaveoutsourcedsomeoftheirAMLfunctionsthemostcommonunctiontobeoutsourcedisaccountopening.Thisisnotsurprisingasthisunctionisprocessdrivenandcanbeairlylaborintensive.Fourty-sixpercentofrespondentshaveoff-shoredpartsoftheirAMLfunctionwithpaymentandsanctionsscreeningtoppingthelist.FromKPMGmemberfrmsexperienceweknowthatresourcingandcostconstraintsarekeydriversinthedecisiontooutsourceoro-shoretheseunctions.RespondentsindicatedthatlossocontroloroversightistheprincipalreasonorrejectingoutsourcingoAMLunctions.Itappearsromourresultsthatthepotentialcostandresourcesavingbeneftsthatariseromoutsourcingando-shoringareweighedagainstthecostsimposedbyregulatorsianorganizationailsKPMGInsightInanenvironmentocostcuttingandresourceshortagesitwasintriguingtoseethatasignifcantnumberorespondentsdonotoutsourceandoro-shoreanyAMLunctions.Wecannothelpbutwonderwhetherstringentregulationshavemadeorganizationssacrifcegoodbusinesspracticeorcomplianceconcerns.Seniormanagementshouldnotlettheearoalossocontrolpreventitsorganizationromreapingthepotentialbeneftsthatoutsourcingando-shoringcanbring.Arobustriskmanagementandcontrolrameworkcanbedevelopedtobettermanagetheserisksandalleviatethepressureplacedonthecurrentcompliancepersonnel.Weexpectbotho-shoringandoutsourcingtolikelycontinuetoincreaseasglobaltrendsbecausecostandresourcesareparamountconsiderationsorthelong-termsustainabilityoglobalAMLprograms.SourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.togetitright.Specifcallyregulatorsimposestrictguidelinesonthesepracticesandmakeclearthatullresponsibilityremainswiththeoutsourcingorganization.Asregulatorsholdmembersoseniormanagementresponsibleorensuringadequatecontrolsareinplaceitisunsurprisingthattheyhavereservationsaboutlossooversightdespitethebenefts.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 21Despiteincreasedinvestmentintransactionmonitoringsystemssatisactionhasdeclined.AlthoughtransactionmonitoringsystemscontinuetorepresentthegreatestareaoAMLspendingitappearsthatregulatoryrequirementsarestilloutpacingsystemimprovements.Sixtypercentofrespondentsreportedtransactionmonitoringasthelargestinvestmentinanti-moneylaunderingcontrols.NotablysinceKPMGsfrstglobalAMLsurveyin2004transactionmonitoringhasconsistentlybeenrankedthelargestAMLcompliancecostdriver.Thecontinuedinvestmentinsuchsystemsmayrepresentthecontinualchangesinrequirementsandexpectationsaswellastheadvancesintechnologicalcapabilitiesoverthisperiodotime.Satisfactionwithtransactionmonitoringsystemshasdeclinedwithsurveyrespondentsrankingsatisfactionanaverageof3.42outof5comparedto3.6in2011.Thereasonorthedeclineinsatisactionseemslinkedtotheincreaseddemandsonthesesystemsasthecostshavecontinuedtoincreasebutsotoohavetherequirementsandexpectationsothesesystemsandthenumberostathatusethem.Transactionmonitoringcostscontinuetosoarassatisactiondeclines2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 22SourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.MiddleEastandAfricaCentralandSouthAmericaNorthAmerica3.3353.6753.1252014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 23OffshorelocationsRussiaCentralandEasternEuropeWesternEurope3.3653.6553.9053.4052014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 24Only58percentofrespondentsstatedthattheirorganizationstransactionmonitoringsystemisabletomonitortransactionsacrossdifferentbusinessesand53percentofrespondentssaidtheyareabletomonitoracrossmultiplejurisdictions.Thisrepresentsasignifcantimprovementsinceour2011surveyinwhichlessthanone-thirdorespondentswereabletomonitoracrossjurisdictionsandalsoupromone-fthsincethe2007survey.Howeverweexpectthisincreasetocontinueaspartocomplyingwithgrowingregulatoryexpectations.Only49percentofrespondentsstatedthattheywereabletosharetransactioninformationacrossdifferentbusinessesandonly45percentofrespondentssaidthattheyareabletoshareacrossdifferentjurisdictions.Althoughmonitoringacrossjurisdictionsandbusinessesremainsanareaorimprovementanareaoevengreaterweaknesshasbeenidentifedwithrespecttotheabilitytoshareinormationromtransactionmonitoringacrossbusinessesandjurisdictions.Giventhatthesemaybecrystallizedrisksthereisaneedoragreatersharingthanisthecasetoday.KPMGInsightMovingtoapositioninwhichanorganizationcanseetheullpicturebymonitoringandsharingitscustomerstransactionsacrossbusinessesandjurisdictionswillhelpacilitatetheidentifcationoanyunusualtransactionsandbehaviors.Whilemanyfnancialinstitutionscontinuetothrowmoneyatthesesystemsinaneorttoupdateandvalidatethemadditionalscrutinyshouldbeappliedtowardswhatwillbesustainableorthelongterminsteadoaimingtomeettodayssetominimumregulatorystandards.AsseniormanagementconsiderstheconcerningoutlookonreturnoninvestmentitmayfndcomortinconsideringthecostbeneftoinvestinginafrmsAMLsystemsversusbeingsanctionedorfneddamagingthefrmsreputationandacingregulatoryshareholderandpublicscorn.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 25RegulatoryvisitscontinuetoocusonKYCwhichhasdirectlyimpactedinvestmentdecisionsasrespondentsrankedKYCthesecondlargestAMLinvestment.Howeverdespitetheincreasedregulatoryattentionandinvestmentkeyobstaclesremain.SeventypercentorespondentsstatedthattheyhadreceivedaregulatoryvisitwhichocusedonKYCsuggestingKYCisstillunderthespotlight.RegulatoryinvestigationshaverequentlydrawnattentiontosignifcantgapsintheKYCinormationmaintainedbyfnancialinstitutions.Sixty-eightpercentorespondentsstatedthatullidentifcationisobtainedorintermediateownersandentities.Regulatorsexpectfnancialinstitutionstoidentiytheirclientsownershipstructuresandtherationalebehindthem.Inthecurrentenvironmentoincreasingregulationandriskitisimportanttoobtaininormationonwhoownsandcontrolsyourclientsstructures.Unpeelingthelayersoownershipcanbecomplexandtime-consumingbutitisnecessarytoidentiytheultimatebenefcialownersoweanticipateanincreaseinthispracticeoverthenextthreeyears.RespondentsstatedthatidentiyingcomplexownershipstructureswasthemostchallengingareaintheimplementationoariskbasedapproachtoKYCcollection.RespondentsinRussiaCentralandEasternEuropeandCentralandSouthAmericaoundthisareaparticularlychallenging.KPMGmemberfrmsexperienceworkingwithfnancialinstitutionsintheseregionssuggeststhatidentiyingownershipstructuresisparticularlychallengingwhereanintermediateentityresidesinajurisdictionwhereAMLrequirementsarenotasstringentordataprivacyprovisionsareparticularlystrong.KnowYourCustomercontinuestobetheocusoregulators2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 26SourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.Weaskedrespondentstorankeachareaintermsofhowchallengingtheimplementationofariskbasedapproachistocollectingcustomerduediligence.Respondentsrankedtheseareasfrom1-5with5representingthemostchallengingand1astheleastchallenging.MiddleEastandAfricaCentralandSouthAmericaNorthAmerica3.404.303.803.303.403.334.333.003.673.673.094.303.483.023.18123450123450123452014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 27OffshorelocationsRussiaCentralandEasternEuropeWesternEurope3.474.213.212.873.023.524.353.132.742.743.574.003.363.363.213.413.983.172.913.000123450123450123450123452014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 28Sixty-sixpercentorespondentsareleveragingtheircurrentKYCprogramstomeetFATCArequirements.Our2011reporthadidentifedFATCAaspresentingoneothegreaterimmediatechallengesandsincethenmanyfnancialinstitutionshaveundertakenenhancementstotheirKYCarrangementsinordertocaptureUSindiciatocomplywithFATCA.TherehasalsobeenanoticeableimpactonsystemsandcontrolsusedtoconsolidaterelevantKYCinormation.AsignifcantnumberoAMLproessionalshavebecomeresponsibleordeliveringFATCAenhancementsandremediationexercisesdespitethelegislationsrelationtotax.Justover49percentorespondentsthinkthatelectronicverifcationchecksleaveorganizationsurtherexposedtocybercrime.Itappearsthatcybercrimeconcernsarereducingtheuseoautomatedonlineverifcationwhichcanhaveasignifcantlong-termimpactonfnancialinstitutionsandtheircustomerrelationships.Specifcallybynotembracingtheautomatedtechnologyinthisareafnancialinstitutionswilloreverbeaskingclientstoproducepassportsorotherormsoidentifcationcausinginconveniencetothecustomerandturningtheirbacksonpotentiallylargecostandtimesavings.Whileitisimportanttoconsidertherisksposedbynewertechnologieswebelievethatfnancialinstitutionsshouldacetheseheadonbyassessingandmitigatingtherisksinordertotakeadvantageotimeandcostsavings.KPMGInsightAlthoughtheocusstillremainsonremediatingKYCflestoaddressandidentiyanydefciencieswestronglyencourageglobalorganizationstoexaminetheirdatagovernancearrangementsanddeterminewhethertheyarelikelytohaveuturegapsindata.KPMGfrmsclientworktellsusthatthereisotenanassumptionthatclientdataisownedbytheAMLteamandnotbytherontofceasdierentdepartmentsincreasinglyseektoleveragethisdataitisbecomingincreasinglycriticalorbusinessestoenhanceclaritysurroundingdataresponsibilityownershipandaccountability.Financialinstitutionsneedtohaveanactionplaninplacetopreparethemselvesortheinevitableadjustmentromlargescaleremediationprogramstoefcientandeectiveperiodicreviews.SeniormanagementshouldconsiderwhetherexistingKYCdocumentationenablesthefnancialinstitutiontodevelopaglobalprofleoitsclients.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 29Eighty-fourpercentofrespondentsstatedthathighriskrelationshipsaresignedoffbyseniormanagement.RegulatorshaveissuedanumberonesagainstorganizationsthathaveailedtoundertakeeectiveenhancedduediligenceonrelationshipswithPEPs.AparticularareaoconcernhasbeentheailuretoevidencethePEPssourceowealthincome.Therearesignicantregionaldierencesperhapsrefectingdierentregulatoryexpectations.PEPHighRiskMediumRiskLowRiskNotApplicable8077331612Riskcategorieswhereorganizationsrequirecustomerstoprovidedocumentstoevidencetheirsourceofwealthandorsourceofincome.360percentconsiderinormationinnewssearches.268percentuseinormationprovidedbythecustomerAccordingtooursurveyrespondentsthetop3methodsofidentifyingPEPs170percentorespondentsusecommerciallistsGrowingregulatorypressureonnancialinstitutionsandtheatermathopoliticalinstabilityincertainregionshaveraisedtheproleopoliticalriskorbanks.FinancialinstitutionsaremoreocusedthaneverontheneedtoexercisemorescrutinyoverPEPtransactions.EightypercentofrespondentsstatedthatPEPcustomersarerequiredtoprovidedocumentstoevidencetheirsourceofwealthandorincome.Seventy-sevenpercentstatedthatthisisrequiredforallhighriskclients.Aswestatedinthe2011surveyreportseniormanagementshouldbemoreactivelyinvolvedinthedecision-processeswithrespecttothehighestriskrelationships.WeareencouragedtoseethatseniormanagementareengagingwithcomplianceintheseareasandnotsolelyinrelationtoPEPs.PoliticallyExposedPersonsPEPscontinuetoleaveorganizationsexposedNotePercentagesmaynotaddupto100asrespondentswereinstructedtoselectallthatapply.SourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 30Sixty-fvepercentorespondentsstatedthattheirorganizationcurrentlycapturesanddistinguishesbetweendomesticandoreignPEPs.Theproposed4MLDintroducesnewrequirementsordomesticPEPswhichacilitatesarisk-basedapproachwithregardtotheleveloduediligenceperormedondomesticPEPscomparedtooreignPEPs.TheDirectiveisexpectedtoclariythatenhancedduediligencewillbeappropriateinallinstanceswherethebusinessrelationshipisdeemedhighriskwhichmayaectfnancialSourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.OrganizationsthatcurrentlycaptureanddistinguishbetweendomesticandoreignPEPs7723MiddleEastandArica6733CentralandSouthAmerica8020NorthAmericaTrueFalse2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 31KPMGInsightDespiteincreasingregulatoryscrutinyinthisareaitappearsthatmanynancialinstitutionsarestrugglingwhenitcomestoenhancedduediligenceonPEPrelationships.Theimportanceoobtainingrobustsourceowealthincomeinormationshouldnotbeunderestimated.Muchothisinormationisotenavailableinthepublicdomainbutrmsstruggletoturntheinormationintoacoherentstoryandhenceidentiygapsandredfags.TheapproachtodomesticPEPrelationshipswillneedtochangewiththeimplementationo4MLDinsomeorganizations.TherisksposedbyPEPsandregulatorsattentiononthemshownosignosubsiding.institutionsthatdonotcurrentlycarryoutenhancedduediligenceorhighriskdomesticPEPrelationships.HowevermemberrmssworkwithclientssuggeststhatmanybankshavealreadyadoptedapolicypositionwhichincludesdomesticPEPconsiderations.49515050Offshorelocations7426RussiaCentralandEasternEurope5743WesternEurope2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 32Aswithour2011surveysanctionscomplianceremainsdifcultasrespondentsrankcustomerscreeningthemostdifcultchallenge.Respondentshaveidentifedthepoorqualityandlackocustomerinormationasthemostchallengingaspectsocustomerscreening.Thisisconsistentwithwhatmemberfrmsseewhenworkingwithclientsontheircorrectiveactionstoaddressdataqualityandcompletenessissuesocustomerinormation.Morethan70percentorespondentsfndsanctionscreeningsystemseectiveintheirorganizationshoweveronly42percentorespondentstesttheirscreeningsystemsoreectivenessattheimplementationstage.Whiletherehasbeenanoticeablecompliancepushtomeetthesanctionsrequirementsthereisstillroomorimprovementparticularlywhenitcomestovalidatingscreeningsystemsandrejectingunds.Sanctionscomplianceshowssignsoimprovementbutstillasorespot2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 33Almost75percentofrespondentsreportedusingtheMT202COVSWIFTmessageforcrossborderwiretransfersasignicantincreaserom50percentrespondentssinceourlastsurveyin2011.ThenancialinstitutionsinNorthAmericaandWesternEuropereportthehighestlevelsosatisactionwithregardstotheirscreeningsystemsperhapsrefectingmoredevelopedsanctionsscreeningsystemsandtheurthermaturednatureosanctionscomplianceintheregions.FurtherinNorthAmericaalmost60percentorespondentsindicatedtestingtheeectivenessotheirscreeningatleastonanannualbasis.Inthelong-termregulatorsarenotlikelytoacceptone-oeectivenesschecksandexpectongoingassuranceprogramsonallaspectsoarmsprogram.Systemeectivenessisoneotheharderareastotestwithrmsincreasinglyusingdummydatatochecktheendresultisasexpected.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 34SourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.RegularityofsanctionsscreeningsoftwaretestingAnnuallyBiannuallyQuarterlyDuringtheimplementationofthesystem5124637MiddleEastandAfrica3367CentralandSouthAmerica60201010NorthAmerica2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 35KPMGInsightWorldeventsandincreasedregulationcontinuetoimpactontheabilityofnancialinstitutionstomeettheirsanctionsobligations.ThepoliticalandcivilunrestintheMiddleEastandNorthAricacontinuetoposechallengesorfnancialinstitutionssanctionsscreeningsystemsintermsorespondingtorapidchangestosanctionslistsandincreasedvolumes.ForeignlanguagescreeningremainschallengingparticularityorbanksoperatinginAsia.Multiplesystemsareotenneededtocopewiththedierentspellingandcharacters.Financialinstitutionsareallocatingincreasedundsandresourcestoincreasingtransparencyocustomerandpaymentinormationinordertocomplywithnewregulationandlegislationsuchasthe4MLDandtheEUFundsTranserRegulation2013.Howevermoreneedstobedonetoimplementassuranceprogramsthatgiveongoingcomortthatsystemsandprocessesareworkingeectively.4242974233178Offshorelocations454114RussiaCentralandEasternEurope31431115WesternEurope2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 36AlthoughmostrespondentsagreedthatregulatoryconsiderationswerethelargestdriverbehindAMLinvestmentdecisionsopinionsonregulatoryapproacharemarkedbyvastregionaldierences.Thisurtheremphasizesthechallengesthatfnancialinstitutionsaceinestablishingagloballyconsistentapproach.RegulatoryapproachisragmentedandinconsistentSourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.WhichofthefollowingchangeswouldyourecommendmakingtotheAMLrequirementsimposedonyourbusinessIncreasedguidanceIncreasinginternationalcooperationtoacilitateconsistencyoapproachLessprescriptiveapproachMoreprescriptiveapproachDierentstyleoregulatoryvisitsassessmentsWiderpublicationotypologiesandthematicreviewsStrongerrelationshipwiththeregulator50564244331117MiddleEastandAfrica6767333333CentralandSouthAmerica67223333222233NorthAmerica2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 37Sixty-threepercentofrespondentssaidthatregulatorsshouldprovideadditionalguidanceand43percentofrespondentsindicatedthatastrongerrelationshipwithregulatorswouldbeawelcomedchangeinapproach.RespondentsinWesternEuropeandtheAmericaswerethemostinterestedinreceivingregulatoryguidance.Inthe2011surveyonly14percentorespondentswantedtoreceivemoreguidanceurtheremphasizingtheaccelerationoregulatorychangeandneedorexpectationstobeclarifedsincethepublicationothelastsurvey.RussiaCentralandEasternEurope68434823141148WesternEurope674433332256Offshorelocations60302050155010634624294612152014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 38Fity-sixpercentorespondentsinMiddleEastandAricastatedthattheywouldliketoseeincreasinginternationalcooperationtoacilitateconsistencyoapproach.TheresponsestooursurveyindicatethatnancialinstitutionsoperatinginthisregionwouldliketheirregulatoryauthoritiestobecomemoreinvolvedintheglobalizationoAMLstandardslearningromtheircounterpartsinothercountriestoimprovetheregulatoryapproachinthisregion.Sixty-fvepercentorespondentsstatedthatregulatoryvisitsareAMLpersonnelsprimaryconcernand80percentorespondentsstatedreactiontoregulatordemandsisaprimaryreasonorinvestmentinaparticularareaoAML.Itshouldbeexpectedthatregulatorinspectionswillcontinuetoocusonthekeyissuesdescribedaboveandthatthenumberorespondentswhohaveexperiencedaregulatoryvisitwillcontinuetoincrease.ThelatestsetoFinancialActionTaskForceFATFrecommendationsrequiremembergovernmentstocompleteaNationalRiskAssessmenttoidentiyassessandmitigatetheirmoneylaunderingandterroristnancingrisks.Theseassessmentsoncecompletedarelikelytoinfuencetheareaswhicheachothenationalregulatorswillocusonoverthecomingperiod.Regulatorsalsocontinuetobecognizantotechnologicalriskswithalternativebankingplatormsdigitalcurrenciesandcybercrimehighlightedashighriskareas.KPMGInsightRegulatoryvisitsarestillstrikingearintotheheartsoAMLproessionalsacrosstheglobehoweverthereasonsremainunclear.IsthistheresultooverlystrictregulationsthatorganizationscannotrealisticallycomplywithorareinstitutionsailingtolearnrompastmistakesFinancialinstitutionsneedtoadoptamoreproactiveapproachtoavoidbeingsubjecttoregulatorynesandsanctions.Seniormanagementshouldbelookingorutureregulatorytrendsinordertoanticipateutureareasoregulatoryscrutiny.Regulatorshavelittlesympathywhenrmsallshortinanareawheretheyhavewarnedtheindustryotherisks.Closescrutinyoregulatorynesandspeechesandbenchmarkingagainstthosendingsisamustoranyresponsiblerm.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 392014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 40NewFocusAreasTradefnancehasrecentlyenteredthespotlightasthematicreviewsandrecentregulatorystudieshavepointedtoconcernacrosstheindustrytoproperlyidentiyandmanagemoneylaunderingriskintradefnancetransactions.Nearly30percentorespondentsstatedthattailoredtrainingonAMLrisksisnotprovidedtotheirtradeprocessingteams.AcorerequirementoranyfrmtoproperlymanageAMLriskintradefnanceandanareaoweaknessidentifedbysomeregulatorsistheprovisionospecifcandtailoredtrainingtorelevantsta.Whileitispositivetonotethatalmost73percentoourrespondentsprovideAMLtrainingunction-specifctrainingshouldbeprovidedtoenableidentifcationospecifcrisksassociatedwithtradefnancetransactions.Thereoredespitethenumberorespondentsthathaveindicatedtrainingisprovideditremainsaconcernthatsoewareprovidingtailoredtrainingtotradefnance.Thisapproachisnotsustainableandfrmswillneedtoaddressthisshortcominginthenextewyearsorriskregulatorycensure.Tradefnancehasemergedasanareaoconcernorsomeregulators.OursurveyresultsidentifedkeyareasinneedoimprovementincludeleveraginginternalKYCinormationusingthirdpartyprovidersorverifcationpurposesandtailoringAMLtrainingtotradefnancesta.Thecomplianceindustryandanti-moneylaunderingeortshaveevolvedatadramaticpacesincewelaunchedourfrstglobalAMLsurvey10yearsago.InrecognitionothisactandbasedondiscussionswithclientswehaveaddedanadditionalsectioninoursurveytoexploresomeothekeyareasimpactedbyemergingchangesinAMLregulations.TradefnanceshouldmakebetteruseoAMLresources2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 41KPMGInsightOurfndingssuggestthatNorthAmericaisaheadothecurvewhenitcomestoleveragingexistingcustomerinormationcollectedthroughanti-moneylaunderingcontrolsaswellasengagingthirdpartyprovidersorverifcationpurposes.Anemergingtrendortherestotheregionsmaybeincreasedusageothirdpartyduediligencewhetherinternallyorexternallyprovided.Inadditiontoimplementingthesepracticesseniormanagementshouldconsiderrisksassociatedwithtradefnanceseparatelyromotherormsomoneylaunderingriskandpromoteawarenessoriskappetitethroughtailoredtrainingotradefnancesta.Seventy-fvepercentorespondentsstatedthattheyhadundertakenriskassessmentsotheirtradefnancebusinessinthelasttwelvemonthsandthattheirtradefnanceoperatingproceduresrequiretheassessmentomoneylaunderingriskatatransactionallevel.Itisencouragingtoseearelativelyhighrateotradefnanceriskassessmentsasitiscriticalthatfrmshavearameworkinplacewhichallowsthemtoproperlyassessanddocumenttheriskomoneylaunderingintradefnancetransactions.Asregulatorshoneinonthesepracticesdocumentingtheapproachtakenandretainingevidenceodecisionsthataremadeatatransactionallevelisalsocriticalandwillserveascrucialevidencetoregulatorsthatfrmsareappropriatelymanagingrisk.Seventy-eightpercentorespondentsromNorthAmericaleverageexistingcustomerinormationintheirtradefnanceoperationwhereasonly51percentorespondentsromWesternEuropeand54percentromAsiaPacifcindicatedengaginginasimilarpractice.TheextenttowhichthetradeprocessingteamleveragesexistingcustomerinormationacquiredbyarelationshipmanagerandcustomerduediligenceteamstoassessmoneylaunderingrisksdierssignifcantlybetweenNorthAmericaandtherestotheworld.ItshouldbeexpectedthatthesefgurestoriseparticularlyoutsideotheUnitedStatesascustomerinormationbecomesincreasinglysharedbetweendepartmentstomeetregulatoryobligations.Fity-sixpercentorespondentsromNorthAmericaindicatedthattheirorganizationusesathirdpartyprovidertoveriytheauthenticityotradefnancedocumentationcomparedto2233percentintherestotheregions.Thirdpartyverifcationprovidersprovideadditionalreassurancetomanyfnancialinstitutionsandareotenabletousetheirindustryexperienceandexpertisetospotnewcriminalmethodstrendsandthreats.Givenrecentlyidentifedindustry-wideweaknessinidentiyingmoneylaunderingandterroristfnancingrisksthroughnationalfndingssuchastheUKsFinancialConductAuthorityFCAtheregioncanbeexpectedtoollowNorthAmericaslead.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 42Only46percentorespondentsexpecttheirorganizationstobeFATCAcompliantbytheIRSdeadlineoJuly2014alowerthanexpectedfgurebutnotsurprising.Thecurrentdeadlineistheresultoasixmonthextensionanditappearsthatmanyfnancialinstitutionsmaybecountingonaurtherextension.ThehighestrateoregionalcompliancewasromWesternEuropewhere61percentorespondentsexpectedtobeullycompliantbytheJuly2014deadline.ThehigherexpectedcompliancerateinWesternEuropemaybeattributedtotheactthattheregionappearstobeleadingthewayinIntergovernmentalAgreementsIGAsastheUnitedKingdomFranceGermanyandSpainwereamongstthefrstcountriestosignup.TheIGAsenablefnancialinstitutionstoreportdirectlytotheirnationaltaxauthoritieswhowillthenreportdirectlytotheUSInternalRevenueServiceIRStosatisyFATCArequirements.Forty-fvepercentorespondentsstatedthatthecompliancedepartmentwouldbesponsoringFATCAonly16percentstatedthatitwouldbethetaxdepartment.Compliancesponsorshipisnotsurprisinggiven66percentorespondentsconfrmedthattheirorganizationsareleveragingexistingAMLKYCprogramstomeetFATCArequirements.Thetaxandcompliancedepartmentshoweverwillneedtocommunicateandcoordinateduringtheimplementationandupdatephasesasinputromthetaxdepartmentisessentialtoensurecorrectinterpretationolegislativerequirements.Thecompliancedepartmentiscrucialtoredesigningtheonboardingormspoliciesandprocedurestocapturethenecessarydataandimplementingtheassociatedcertifcationrequirements.TaxevasionhasreceivedincreasedattentionromregulatorsthroughtheenactmentoFATCAbutalsothroughotherpiecesoregionallegislationwhichestablishestaxcrimesasapredicateoence.AMLproessionalsappeartohavetheirworkcutoutorthem.TaxevasionandFATCAcomplianceremaintaxingDepartmentssponsoringFATCA1651851645TaxComplianceRiskOperationsNotapplicableOtherSourceGlobalAnti-MoneyLaunderingSurveyKPMGInternational2014.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 43KPMGInsightUpdatingKYCsystemsandidentiyingandcapturingUSindiciaareonlythefrstomanystepsincomplyingwithFATCA.SpecifcallynotonlyaresomenationaltaxauthoritiessuchasthoseintheUnitedKingdomamendingtheirlegalsystemstocapturetaxresidencyatonboardingonewcustomersbutsomearealsoconsideringtheenactmentoreciprocaltaxlegislationtoenablecross-jurisdictiontaxcooperation.ForexampleautomaticexchangeoinormationmaybethenextwaveolegislationastherearecurrentlyongoingeortsbytheG8G20andtheOrganisationorEconomicCo-operationandDevelopmentOECDtodevelopaglobalstandardinthisarea.Asaresultfnancialinstitutionsshouldconsideruturechangesintaxregimesandinormationsharingproposalsthatmayaecttheiroperationsandplanaccordingly.Inaregulatoryenvironmentthatcontinuouslychallengesfnancialinstitutionstosinkorswimasurefrewaytosinkwouldbetoimplementchangeprogramsaimedatonlymeetingtherequirementsoonepieceolegislationinsteadokeepinganeyeoutorsimilaractsromothercountries.Sixty-eightpercentofrespondentsconsidertheriskoftaxevasionwhenperformingriskassessmentsontheircustomershoweverthisfgureisexpectedtoriseinupcomingyearsinlightotherecentregulatoryocusonfscalcrimesthrough4MLDFATCAandotherpotentiallysimilarregulationsintheuture.Additionallywhilethesepiecesolegislationarestillintheimplementationphaseweexpectregulatoryfnesinthecomingyearstoreinorcetaxevasionconsiderations.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 44Theassetmanagementsectorisasignicantandgrowingaspectotheglobalnancialservicesindustry.Worldwideassetsundermanagementstoodatover35000bnUSDasatJune2013with45percentotheseundsmanagedintheUSand36percentmanagedacrossEurope.1During2013uptoandincludingOctober2013salesoinvestmentundsacrossEuropeamountedtoEUR341.4bn.2Whilethepreciseprevalenceocriminalproceedswithinthesesumsisunknownitisarisktowhichrmsandregulatorsaredevotinggreaterattentionandresources.Seventy-threepercentoassetmanagementrespondentsreportedthatmoneylaunderingwasconsideredahighriskareawithintheirorganizationsbusinessriskassessment.Oursurveyresultsindicatethattheperceptionothesectoraslowriskmaybeshiting.AMLproessionalsoperatinginassetmanagementunderstandtheirsectorisnotimmuneromabusebypersonsseekingtoobuscatetheoriginsocriminalassetsorundterroristactivities.However23percentoassetmanagementrespondentsstilldisagreewiththeassertionthatmoneylaunderingisconsideredahighriskinthefrmsbusinessriskassessmentrepresentingthesectorthathadthegreatestproportionodisagreementandpointingtoadivergenceoviewsacrossthesector.Eighty-sixpercentorespondentsreportedthatinvestmentinAMLactivityhadincreased.InvestmentinAMLacrosstheassetmanagementsectorisgrowingrapidly.Theaverageincreaseininvestmentoverthelastthreeyearswasapproximately46percentcomparedtoapproximately20percentortheinsurancesector.FourteenpercentoassetmanagementrespondentsexpectinvestmentinAMLtoincreasebyatleast50percentoverthenextthreeyearsandtheaveragereportedrateoexpectedgrowthininvestmentinAMLinthesectoroverthecomingthreeyearswas24percent.OursurveysshowthatnancialinstitutionstendtounderestimatetheextentoinvestmentinAMLassetmanagersmayberunningthisriskandshouldactivelyconsiderwhethertheirinvestmentlevelswillsucientlyequipthemtomanagetheirmoneylaunderingriskexposure.Ninety-onepercentorespondentsagreedorstronglyagreedthattheBoardoDirectorstakesanactiveinterestinAMLissueswith59percentorespondentsstatingthattheirorganizationsBoardoDirectordiscussesAMLquarterly.TheseguresaccordwithourexperienceinthesectorAMLisgenerallymovinguptheriskmanagementagenda.Only28percentoassetmanagementrespondentsregularlytunethethresholdsincorporatedintotransactionmonitoringsystemsrankingpoorlycomparedto72percentintheretailbankingsectorand52percentintheinsurancesector.Thisaspectocurrentpracticeisunlikelytobesustainablethisgureisthereoreexpectedtoincreasesignicantlyoverthenextthreeyears.Moneylaunderingriskiscomingintosharperocusinthesectorasseniormanagementengagementandinvestmentlevelsrise.Assetmanagementsectorresultsrefectchangingattitudes1.EFAMAInvestmentFundIndustryFactSheetOctober2013httpwww.eama.orgPublicationsStatisticsMonthlyMonthly20Fact20Sheets131218_EFAMA20Monthly20Fact20Sheet20October202013.pd2.EFAMAInvestmentFundIndustryFactSheetOctober2013httpwww.eama.orgPublicationsStatisticsMonthlyMonthly20Fact20Sheets131218_EFAMA20Monthly20Fact20Sheet20October202013.pd2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 45KPMGInsightThevastmajorityoassetmanagementfrmsunderstandthattheirorganizationsarenotimmunetoabusebypersonsseekingtoobuscatetheoriginsocriminalassetsorindeedundterroristactivitiesandrecognizethatgreatereortsarerequiredtounderstandandmanagetheserisks.HoweverareallassetmanagersuptothechallengeAssetmanagementrespondentsmostcommonlynotedthepaceandimpactoregulatorychangeasaconcernortheirAMLpersonnelwhilstidentiyingmorerequentlythanothersectorsthelimitedavailabilityoappropriateresourcesasabarriertoachievingcompliance.Assetmanagersaceparticularchallengesinmanagingtherisksarisingromtheuseoorrelianceuponthirdpartiesobtainingappropriatedatatoenablemeaningultransactionmonitoringandimplementingappropriatecustomerriskassessmentmodels.OurrespondentsexpectregulatoryinterestinAMLintheassetmanagementsectortocontinuesosuchorganizationsshouldbepreparedorgreaterenquiryandchallenge.Therearenotableareasorimprovementwhichinotaddressedmayresultinabusebycriminalsandregulatoryexposure.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 46RegulatorsparticularlytheOfceoForeignAssetControlOFACintheUShaverecentlybeguntoocusmorecloselyonhowinsurancecompaniesmanagesanctionrisksandrecentfnesandinvestigationsinvolvinginsurersisevidenceotheactthatcompliancewithinternationalsanctionsregimesandcounterterroristfnancingCTFregulationshasbecomeextremelyimportantortheinsuranceindustry.Whilegeneralinsurersandgeneralinsurancebrokersnon-liearenotsubjecttointernationalmoneylaunderingregulationstheyarestillrequiredtocomplywithsanctionlegislation.Insurancefrmsthataresubjecttomoneylaunderingregulationssuchaslieinsurershavearegulatoryobligationtoputinplaceandmaintainpoliciesandprocedurestomitigatetheirmoneylaunderingriskandmusthavesystemsandcontrolsinplacetopreventanddetectmoneylaundering.Sixty-twopercentorespondentsromtheinsurancesectorconfrmedthatmoneylaunderingisconsideredahighriskareaintheirbusinessriskassessmentscomparedto92percentoretailbanksand90percentoassetmanagerssurveyed.Theresultsareexpectedgiventhelowerriskproductsoeredbythesectorbutwestillanticipateanincreaseoverthenextthreeyearsduetotherecentregulatorattentionthesectorappearstobeattracting.Ninety-sixpercentoinsurancerespondentssaidthattheircomplianceproceduresreerencedCTFwhichwassimilartoothersectorssuchasretailbanking97percentandtoassetmanagement100percent.Thiswasverypositivetoseeasitisverymuchinlinewithothersectorsdespiteperceptionsoinsurancebeinglesssusceptibletoterroristfnancingabuse.Eighty-onepercentoinsurerssaidthattheirBoardoDirectorstookanactiveinterestinAMLissuescomparedto91percentoretailbanksand90percentoassetmanagers.WeareencouragedtoseethatseniormanagementisengagedinAMLissuesandweanticipatethatthiswillonlycontinuetoincrease.Seventy-fvepercentoinsurerscitedthepaceandimpactoregulatorychangeastheirbiggestAMLconcern.Thisdemonstratesthatinsurersarealsoeelingthepressurethatbankinginstitutionsareexperiencingwithregardstorecentregulatorychanges.Over84percentoinsurancerespondentsconfrmedthattheyhadestablishedaprogramortestingandmonitoringtheeectivenessoAMLsystemsandcontrols.Howeveronly47percentoinsurerssurveyedeltthattheirsotwarewaseective.Inourviewthedissatisactionthatinsurersareexperiencingwiththeirtransactionmonitoringsystemsmaybeassociatedwiththerapidchangesinexpectationsosuchsystemsandtheverydierenttypesotransactionsconductedintheinsuranceindustry.Over76percentoinsurerssaidthatreputationprotectionwasakeyactorwhenconsideringinvestmentinAMLandsanctionsprocedures.Otherkeyactorsidentifedweregainingoperationalefcienciesandreactingtoregulatoryrequirements.WhileinsurersaregenerallyawareotheimportanceoAMLandsanctionscomplianceregulatorycompliancecomeswithseveralchallenges.Insurancesectoralignswelltooverallfndings2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 47KPMGInsightItisevidentromtheresultsothesurveythatinsurersaregenerallyawareotheimportanceoAMLsanctionsandCTFcompliancebutthatregulatorycompliancecomeswithseveralchallenges.InsurersneedtohaverobustAMLsanctionsandCTFriskmanagementprocessesinplaceandwhileregulatorsallowariskbasedapproachtothisprocesstheyusuallytakeazero-toleranceapproachtoenorcement.SanctionsapplytoallinsurersregardlessoAMLregulatorycompliance.ThequestionhereisianinsurerdecidesnottocollectKYChowisitabletoeectivelyscreenitsclientsGiventherecentincreasedocusbyregulatorsontheinsurancesectorparticularlyonsanctionsKYCwillbecomeevenmoreimportantgoingorwardanditissaetoassumethatinthenextthreetofveyearsregulatorswilladoptanapproachtowardsinsurersthatwillbesimilarandmorealignedtotheapproachadoptedwithregardtobankingparticularlyorhighriskproductssuchasmarineandaviationinsuranceandinregardtothoseinsurerswhowriteinhigherriskjurisdictions.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 483PrepareeectivelyorregulatorvisitsandensurethattheBoardcandemonstrateawarenessandoversight.2Ensureabroad-rangingassuranceprogramisinplacewhichtestssystemsprocessesandprocedures.KPMGs3recommendationsforBoards1NominateamemberotheBoardwithresponsibilityormaintainingeectiveAMLcontrols.ConcludingremarksOurreporthighlightsthatAMLinitiativesarebecomingincreasinglyinterconnectedacrossoperationsandjurisdictionsasaresultoademandingandcontinuouslyevolvingregulatorylandscape.InormationcollectedbyAMLteamsisnowbeingleveragedacrossorganizationsinanindustrywideeorttomeetregulatoryrequirementsandkeepupwithindustryexpectations.ManyglobalfnancialorganizationshavecontinuedtoinvestsignifcantlyinAMLcontrolsandsecureseniormanagementengagement.Howeverconsiderablechallengesremain.Inparticularsince2004transactionmonitoringhasbeenthegreatestinvestmentbutremainsanareaoweakness.Maintaininguptodatecustomerrecordsaswellasobtainingandretainingtrainedstaalsoprovestobeachallenge.AlthoughthefnancialservicesindustryisincreasinglymovingtowardsagloballystandardizedapproachthereisstillnotableinconsistencywithregardtoimplementationoAMLcontrolsatregionalandlocallevels.Thisisnottoodissimilarromtheragmentedapproachregulatorscontinuetodisplayintheirglobaleortstomanagefnancialcrime.Despitesomepositivestepsandevidentstridesincomingtogripswiththe21stcenturychallengesposedbymoneylaunderingthreatsregulatorsandthefnancialservicesindustrycontinuetolagbehindtodaysgloballyconnectedmoneylaunderers.Inconsistentregulationshaveletgapsinwhichmoneylaunderersthriveandassuchitwillbecomeessentialthatregulatorsimplementaconsistentregulatoryapproachbutalsoosteracloserworkingrelationshipwithindustryproessionalsinordertoleverageeachothersresourcesalignmutualinterestsandeectivelytacklefnancialcrime.ThewayinwhichfnancialinstitutionsrespondtoAMLchallengeswillcontinuetoremainsubjecttopublicscrutinyasregulatorsinvestorsandmembersothepubliccontinuetostresstheimportanceomanagingtheseriskseectively.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 492014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 50RegionalCommentaryRegionalcommentary2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 51512014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 52RegionalCommentaryAsiaPacifcSurveyResultsBoardgovernancehasimprovedbutisstillbehindtheglobalaverage.Over80percentorespondentsindicatedthattheBoardoDirectorstakesanactiveinterestinAMLwhilethisisasignifcantincreaseromour2011surveyitisstillshortotheglobalaverageonearly90percent.MoreoverwhilethepercentageofnancialinstitutionssurveyedwhichregularlydiscussAMLissuesattheboardlevelhasjumpedrom27percentto51percentthisremainsbelowtheglobalaverageo66percent.AsPACfnancialinstitutionsoeringAMLtrainingtotheirboardmembersisalsosubstantiallylowerthanglobalfndings47percentagainstaglobalaverageo62percent.ThisissignifcantbecauseregulatorsinAsPACarebecomingmuchmorevocalintheirexpectationswithrespecttotheroleotheBoardoDirectorsinthemanagementandoversightotheirAMLcomplianceprograms.Technologyeectivenessstillcanbeimproved.Theenhancementotransactionmonitoringsystemsisoneothelargestareasoinvestment.Morethan50percentorespondentsindicatedthatoallthealertsgeneratedlessthan1percentactuallyresultedintheflingoaSuspiciousActivityReportSAR.Thisisdespitemorethan70percentrespondingthattheirorganisationregularlytunesthethresholdsotheirtransactionmonitoringsystems.AMLregimesacrosstheAsPACregionremaindiverse.ManyjurisdictionswithlargefnancialmarketshaveimplementedlegislationinlinewiththeevolvingglobalstandardshoweversomejurisdictionsremainonthelearningcurveandaregraduallyintroducingenhancedAMLcontrols.TheAsPACsurveyrespondentsmainlyoperatewithintheselargerfnancialmarketssuchasHongKongSingaporeandAustralia.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 53ManyarestillnotreadyorFATCA.Lessthan50percentorespondentsbelievetheywillbeFATCA-compliantbyJuly2014despitethesixmonthextensionthatwasgrantedtogiverespondentsadditionaltimetoatleastgettheirFATCAprojectsunderway.LookingorwardFATCAhasthepotentialtobecomeasignicantdriveroimprovementsintheKYCprocess.Morethan40percentrespondedthatincompleteCDDrecordsaretheirgreatestFATCAcomplianceconcernollowedbyprocesschanges.Interestinglywhilemanyotherespondentsrecognizedtheneedandtheurgencyorprocesschangeonly14.6percentonancialinstitutionsrmsinAsiaPacicincludeproceduralchangeamongitstop3investmentareassignicantlylowerthantheglobalaverageo26.3percent.Regulatorsaremoreengagedbuturtherguidanceisstillneeded.AcrossAsPACourrespondentssaidthatthetopthreeareasthatregulatorsocusonduringsitevisitswereCustomerDueDiligence70percentOngoingmonitoring56percentandEnterprise-wideAMLriskassessments54percent.AsignicantnumberalsomentionedPEPsandSanctionsComplianceasareasointeresttotheregulators.RegulatorychangeisthekeydriveroAMLinitiativeswithmanyAsPACregulatorsintroducingandenhancingAMLrequirementsoverthelastewyears.Thishasresultedin82percentoAsPACrespondentsmentioningthepaceandimpactoregulatorychangeastheirtopconcern.Sinceourlastsurveyin2011anumberolocalregulatorshavetakenstepstosignicantlyincreasethesizeotheirsupervisoryteamsandtheyappeartobetakingamorehands-onapproachwiththematicreviewssitevisitsandothermethodstoencouragecompliance.AcrosstheregiontherearealsomorerequentreportsoregulatoryenorcementactionalthoughthescaleopenaltiesremainslessthanseeninotherregionsandtendstobelesspubliclyreportedthaninWesternEuropeorNorthAmerica.Surveyrespondentsarealsolookingtoregulatorsormoreguidancesuchaswiderpublicationsotypologiesandthematicreviewsandmoreinternationalcollaborationtoensureconsistency.Lackoqualifedresources.SimilartootherregionstheAsPACnancialinstitutionssurveyedhaveratedthelackoqualiedresourcesasoneotheirtopconcernswithonly67percentotherespondentsinAsPAChavingmorethan3yearsoexperienceinAMLascomparedto82percentinWesternEuropeand85percentinNorthAmerica.ThischallengeisalsorefectedintherespondentsAMLbudgetallocationwhere46percentrankedrecruitmentasoneothetopthreeAMLbudgetspendingareas.RegulatorsinAsiaarebecomingmuchmorevocalintheirexpectationswithrespecttotheroleotheBoardoDirectorsinthemanagementandoversightotheirAMLcomplianceprograms.InparticularmanyregulatorsareaskingtheBoardoDirectorstodemonstrateactivemanagementomoneylaunderingandterroristnancingriskstodeveloparobustriskculturethroughouttheirorganisationsandtoensurethattheirAMLcomplianceprogramsaresucientlyresourced.AsaresultitisexpectedthatBoard-levelinterestinAMLwillcontinuetoincrease.KyranMcCarthyKPMGsHeadoAMLorAsiaPacicregion2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 54RegionalCommentaryOutlookThepaceoAMLregulatorychangeandimplementationoreormshasacceleratedwithregulatorskeentoensurethecompetitivenessotheirmarketsintheglobalspherethistrenddoesnotappeartobestoppinganytimesoon.Manyregulatorsinthedevelopedcountriesarebecomingmuchmorecollaborativeintheirapproach.Regulatorsarealsostartingtoconductmorein-depththematicreviewsandpublishingtheresultstoacilitatecomplianceandeectiveness.OveralltheAsPACregionacessimilarchallengestotherestoworldincludinglackoqualifedresourcesthequestormoreeectivetransactionmonitoringandreadinessorFATCA.HoweverAsPACdoeshaveitsownuniquechallengessuchasthelargediscrepancyindierentjurisdictionallawsandregulationsthatrequireadditionallocaleorttomanage.AsPACregulatorsandfnancialinstitutionsalsoneedtourtherimproveawarenessandeducationattheBoardlevelandaddressglobaltopicalissuessuchastaxevasion.Atthesametimewebelieveregulatorsarelikelytocontinuewiththeirreviewsandincreasetheleveloscrutinyoverthenextthreeyears.Inadditionitislikelytheirocuswillbroadenbeyondthebankingsectortoincludeotherinstitutions.Astheregulatoryrequirementsincreaseweanticipatethatnon-bankfnancialinstitutionssuchassecuritiesinsuranceandremittanceandmoneychangerswillberequiredtotightentheirinternalcontrols.AcrosstheregionKPMGmemberfrmshaveseenmorerequentreportsoregulatoryenorcementactionsalthoughthescaleopenaltiesremainslessthanthatseeninotherregions.RegulatorswillcontinuetoincreasetheleveloscrutinypaidtofnancialinstitutionsoverthenextthreeyearsalthoughitremainstobeseenwhethertheenorcementactionsandpenaltieswillincreaseandbereportedmorepubliclytoalevelcomparabletothatseeninWesternEuropeandNorthAmericatoday.Lastlyregulatorsandfnancialinstitutionswillneedtoadapttoacenewchallengesinmanagingthemoneylaunderingrisksassociatedwithemergingindustriesorpaymentchannelssuchasvirtualcurrenciesinthecomingyears.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 552014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 56RegionalCommentaryTheprofleoAMLwithintheMiddleEastandAricaregionhasrisenoverthelastthreeyearsbutstillacessignifcantchallengesinrespectocomplianceespeciallywithregardtocustomerduediligencetransactionmonitoringandPEPidentifcation.TheMiddleEastandAricaSurveyResultsPerhapsthegreatestconcernorMiddleEasternandAricanbanksintheAMLandCustomerDueDiligenceCDDtechnologyspaceisthelackodataconsistency.Thisisalreadyconsistentwithwhatishappeningwithintheindustrytoday.Theregulatoryenvironmentcontinuestodevelopandcompliancebecomesamovingtargetthatwillrequirebankstoconstantlyre-visitreviewandre-investintheirbusinessprocessesandtechnologytoimproveefcienciesandcurtailsomeotheincreasingcostocompliance.Thebankssurveyedalsoindicatedthatthe3mainconcernsontheirAMLagendaarethelackoqualifedresources76.6percentthepaceandimpactoregulatorychange72.3percentaswellasthelackooveralltraining72.3percent.Encouraginglythesurveyshowsthatthevastmajorityorespondentsperormullidentifcationandverifcationocustomerswhichincludesmaintainingarecordothecustomersintermediateownersandentities.Ogreatconcernhoweveristhefndingthatonly24.4percentotherespondentsintheMiddleEastandAricanregionutiliseanautomatedcustomerriskassessmentprocessmainlyduetotheirinabilitytorecordallrelevantinormationintheircustomerdatasystems.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 57TherehasbeenheightenedfocusonPoliticallyExposedPersonsinAfrica.TherecentuprisingsinNorthAricaandtheMiddleEastdubbedtheArabSpringhaveresultedinheightedattentionbeingpaidtotheactionsorulingpartiesandpersonswithintheaectedcountries.ThishasalsoledtoanincreasedocalpointonpotentialPEPsresidinginthesecountriesresultinginanumberoPEPsbeingclassifedassanctionedindividualsduetotheirassociationwiththerespectiveregimes.TheglobalAMLsurveyoundthatasurprisinglylowpercentage77.3percentotherespondentsindicatedthattheyrequirecustomersclassifedasPoliticallyExposedPersonsPEPstoevidencesourceowealthandorsourceoincome.AhighnumberorespondentsconfrmedthattheyfnditchallengingtomonitorthesePEPrelationshipsandalargenumberobanksintheEasternAricanregionstillrelyexclusivelyonrontofcestatoidentiyPEPs.OutlookKPMGmemberfrmsexpectregulatoryattentiontocontinueocusingonKYCandPEPidentifcationparticularlyinAricaandtheMiddleEastwherebanksarestillstrugglingtokeepupwithregulatoryrequirements.ThemainocusoregulatoryattentionintermsoAMLCFTsupervisionandinspectionsacrosstheAricancontinenthasbeenprimarilytargetingbanksandtherehasnotbeenasignifcantincreaseinattentiononotherfnancialservicesindustriessuchasinsuranceandstand-aloneassetmanagemententities.Howeveritseemstobealikelytrendthatshouldbeexpectedinthenearuture.Specifcfnesrelatingtofnancialcrimecompliancehavebeenhandeddownhoweversuchfneshavebeenminimaltodate.Theleveloregulatoryscrutinyhashoweverincreasedsubstantiallyandthereoreamajorincreaseinfnesmaybelikelyinthenearuture.ForexampletheSouthAricanReserveBankrecentlysuggestedthatthereiscurrentlyconsiderationoimposinganindustry-widefneacrossallbanksorailuretocomplywithAMLregulationsundoubtedlycreatingarippleeectacrosstheSouthAricanfnancialindustry.EectivePEPmanagementremainsimportantinthedeenceagainstanyallegationsodoingbusinesswithpossiblecorruptpersons.ThereisstillsomuchthatneedstobedoneinthefeldoPEPidentifcationandmanagementespeciallyontheAricancontinent.TersiaRossouwHeadoAMLKPMGinSouthArica2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 58RegionalCommentaryWesternEuropeInrecentyearsstepshavebeentakenthroughouttheEUtocreateaconsistentapproachtothepreventionanddetectionomoneylaunderingandterroristnancing.TheEUFourthMoneyLaunderingDirectivewillbeapprovedduring2014toaligntheregulatoryregimewithintheEuropeanEconomicAreawiththelatestFATFRecommendationsissuedinFebruary2012.TheimplementationothisnewDirectivetogetherwithcompliancewithFATCArequirementswillbeachallengeorthecountriesintheWesternEuropeanregion.SurveyResultsAMLremainsasignifcantriskandcostandseniormanagementinteresthasincreasedcomparedtootherregionsandprevioussurveys.TheimportanceoAMLtoEuropeanseniormanagementhasincreasednoticeably.Whereonly55percentorespondentsindicatedthatseniormanagementtookanactiveinterestinAMLissuesin20112014resultsshowthatnearly90percentorespondentsstatedthatAMLwasahighproleissueinwhichthemainBoardoDirectorstookanactiveinterest.ThismayinpartbeduetotheincreasingconcernaboutthepaceandimpactoregulatorychangessuchastheimplementationoFATCArequirementswithpolicyandproceduralchangeshavingtobeimplemented.ThishigherinterestisrefectedbyanincreaseinthepercentageorespondentswhostatedthatAMLwasdiscussedormallybytheBoardoDirectorsonaquarterlybasis41percentuprom35percentin2011orasotenasrequired37percent.WithinEurope77percentorespondentsstatedthatthecostoAMLcompliancehadincreasedoverthelastthreeyearsandaurther70percentanticipateadditionalincreasesinthecomingyears.Thetopthreeinvestmentswerelistedasenhancingtransactionmonitoringsystems52percentKYCreviewsupdatesandmaintenance52percent2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 59andpoliciesandproceduralchangesortheimplementationoFATCA44percent.WhileAMLcostshavecontinuedtorisetherehasbeenasignifcantincreaseinthepercentageorespondentsthathadconsideredo-shoringoroutsourcingsomeotheirAMLunctions48percentupromonly18percentin2011.TherehasalsobeenasignifcantincreasewithinWesternEuropeinrespondentsadoptingamoreglobalapproachwithmorepoliciesandproceduresbeingdevelopedandimplementedglobally.Stillthereisroomorimprovementasonly33percentothosethathaveaglobalpolicyareabletomaintainglobalconsistencyacrosssubsidiariesandbranches.ThepercentageoEuropeanfnancialinstitutionsthatormallytesttheirAMLsystemsandcontrolshasrisenrom76percentin2011to84percentwhichiscomparabletotheaverageacrossallregionsnearly85percent.PoliticallyExposedPersonscontinuetobeanareaoocuswithanoticeablechangeinseniormanagementinvolvement.Inourlatestresearch88percentoEuropeanrespondentssaidthattheyhadinplaceaseparateprocedureortheidentifcationandmonitoringoPEPrelationshipswithnearly90percentrespondentsrevealingthatseniormanagementwasinvolvedinthesignoprocessortakingonhighriskrelationshipssuchasPEPs.Howeveronly57percentoEuropeanfnancialinstitutionscurrentlycaptureanddistinguishbetweendomesticandoreignPEPswhilethisisthecasein80percentoNorthAmericanfnancialinstitutions.Thiswillneedtochangewhenthe4MLDisimplemented.Aurther93percentoEuropeanrespondentsindicatedthatstaareprovidedspecifctrainingandawarenessonbriberyandcorruptionrisksassociatedwithPEPs.Sanctionscomplianceremainsachallenge.TherehasbeenasignifcantincreaseinthepercentageoEuropeanfnancialinstitutionsthatmonitorincomingSWIFTmessagesorincompleteoriginatorinormation91percentuprom66percentin2011and52percentothemwouldstopatransactionwhendetailsotheoriginatingpartyaremissingwithanadditional31percentrejectingthetransactionwhenabankrepeatedlyprovidesincompleteSWIFTinormation.Againthisisanimprovementromsurveyresultsin2011whenonly45percentoEuropeanfnancialinstitutionsstoppedtransactionsmissingthisinormation.ThegreatmajorityoEuropeanfnancialinstitutions72percentstatedthattheyalwaysusetheMT202COVmessagewhichisasignifcantincreaseromtheresultsinthe2011survey25percent.Howeveronly50percentoEuropeanrespondentsindicatedthatineveryinstancewhereaMT202COVlackedrequiredinormationitwouldberejected.Despiteincreasedinvestmentintransactionmonitoringsystemssince2011satisactionorthesesystemshasmoderatelydeclinedwithanaveragescoreo3.3outo5intheWesternEuropeanregion.TransactionmonitoringcontinuestobethelargestAMLcompliancecostdriverorEuropeanfnancialinstitutionssoitisworryingthatsatisactioncontinuestodecline.Furtheronly58percentoEuropeanrespondentsindicatedregulartuningothresholdsortheirtransactionmonitoringsystems.RegulatoryapproachwasrankedasthetopAMLconcern.Meetingnewregulatoryrequirementswasrankedwithanaveragescoreo4outo5asthemostchallengingareatothebusinessoEuropeanfnancialinstitutionswithrespondentscitingthepaceoregulatorychange68percentandresourceconstraints66percentastheirgreatestchallengetoregulatorycompliance.Aurther68percentoEuropeanrespondentsrecommendedthatincreasedguidanceshouldbegivenwithrespecttomeetingAMLrequirementsimposedonbusinessesand48percentalsorecommendedincreasedinternationalcooperationtoacilitateconsistency.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 60RegionalCommentary2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 61OutlookSincethe2011surveytheocusonAMLandSanctionscompliancecontrolsbyregulatorybodiesacrossEuropehascontinuedtointensiy.TherehavebeenanincreasingnumberoregulatoryfnesintheregionandotenfnancialinstitutionsstruggletocomplywithareassuchasSanctionsscreeningidentifcationobenefcialownersblockingocustomeraccountsandcross-borderpaymentscreening.AnEUFourthMoneyLaunderingDirectivewillbepublishedduring2014toaligntheregulatoryregimewithintheEuropeanEconomicAreawiththerenewedFATFRecommendationsapprovedinFebruary2012.InadditionsomeEuropeanSupervisorshaverecentlydevelopedlocalguidanceinordertoassistthefnancialsectorintheimplementationobenefcialownerandPEPpoliciesandprocedures.InthiscontextmanyEuropeanfnancialinstitutionsacethechallengetoimplementandenhancetheirinternalpoliciesandproceduresinareassuchasSanctionscompliancePEPscreeningandmonitoringandthedevelopmentandimplementationoglobalAMLpoliciesandprocedurestobeappliedtoallbranchesandsubsidiaries.ManyfnancialinstitutionswillalsoneedtoassesstheAMLriskspresentedbytheirtradefnancebusinessinordertoamendtheirexistingtradefnanceproceduresandprovidetrainingtothetradeprocessingstaonthemoneylaunderingrisksintradefnancing.FinallyEuropeanfnancialinstitutionswillneedtobeFATCA-compliantbytheIRSdeadlinesromJuly2014onwards.InthatcontextfnancialinstitutionswillneedtoleverageexistingAMLKYCprogramstomeetFATCArequirementsandtakethenecessarymeasurestoaddressthegreatestcomplianceconcernscausedbytheFATCArequirementsinareassuchascustomeridentifcationprocessesmaintenanceandcompletenessoCDDrecordsaswellasreportingcapabilities.ConsideringthenewEUFourthMoneyLaunderingDirectivewillbeapprovedduring2014weexpectmemberfrmsclientswillbeocusingonenhancingtheirsanctionspoliciesandproceduresadaptingthepoliciestothenewregulationregardinglocalPEPsandapplyingglobalpolicyatGroupleveltoallbranchesandsubsidiaries.EnricOlcinaKPMGsHeadoAMLorEuropeMiddleEastandAricaregion2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 62RegionalCommentarySurveyResultsThemainreasonintheregiontoinvestinAMLisprotectionofreputationrankedapproximately15percenthigherthantheglobalfndings.ItwouldseemthatwhenitcomestoinvestinginAMLconcernsoverreputationarestrongermotivatorsthanregulatoryactionssuchasfnesandinspectionsalthoughtheseareclearlylinked.ThetopthreeareasofAMLinvestmentfortheregionweretransactionmonitoringsystemsproceduralupdatesandFATCAinitiatives.WhiletheresultsorincreasedinvestmentintransactionmonitoringareinlinewithglobalfndingsitisinterestingtonotethatdespitethetopthreeglobalinvestmentsalsoincludingKYClook-backreviewsandrecruitmenttheseadditionalareaswerenotareasoheavyinvestmentintheregion.TheregionsinvestmentinFATCAwasamongthehighesturtherreinorcedbytheactthat86percentoparticipantsromRussiaCentralandEasternEuropeconsideredtheriskotaxevasionwhenconductingmoneylaunderingriskassessmentshigherthanthereportedglobalaverage.RussiaandCentralandEasternEuropeTheregionvariedsignifcantlyromglobalfndingswithrespecttokeydriversbehindAMLinvestmentandwastheonlyregiontorankFATCAandproceduralupdatesinthetop3AMLexpenditures.TrainingoAMLandnon-AMLstaalsoappearedtovaryromglobalfndings.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 63StatrainingorRussiaCentralandEasternEuropevariedsignifcantlycomparedtotheglobalfndings.TrainingtoAMLstawasprovidedlessrequentlyinthisregionwhencomparedtotheglobalsurveyfndingshoweveragreaterthanaveragenumberotherontofceanddirectorswereprovidedwithAMLtraining.AlthoughAMLmembersostareceivelesstrainingtheresultsoundthattrainingtootherdepartmentsonAMLconcernswashigh.AreasonorthismaybethattheleveloautomationothecustomerMLriskassessmentprocessissignifcantlyhigherthanmanyotheotherregionstheAMLstamaythereorehavemoretimetoocusonotherareasincludingtrainingoothernon-AMLstamembers.OutlookThemajorityoamendmentsthathaveoccurredtolegislationorarestillexpectedtooccurencompasssomefnetuningonationallegislationincorporatingFATFrecommendationsandfndings.TheamendedlawsaresettowidenthescopeoAMLcoveredorganisationstoincludemicro-fnancemicro-creditorganisationsmutualinsurancesocietiesmobileoperatorsprivatepensionundspaymentservicesindividualentrepreneursinvolvedinmentionedactivityamongotherorganizations.Anincreaseinregulatoryactionshouldbeanticipatedincludingon-sitevisitsfnesandrevokingolicenses.TheCentralBankoRussiaorexamplehasrecentlyintensifeditsinspectionsin2013havingrevokedbankinglicencesomorethan40banksorbreachesinAMLlegislationamongotherreasonsalmosttwicetheamountin2012inwhich22bankinglicenceswererevoked.SimilarlyintheCzechRepublictherehasbeenanoticeableincreaseincriminalcomplaintsfledbytheFinancial-AnalyticalDepartmentotheMinistryoFinanceasthenumberocriminalcomplaintsin2012rosebyapprox.70percentcomparedtothepreviousyear.ThisseemssettocontinuethroughoutthenextewyearsasregulatoryattentionpaidtoAMLailurescontinuestointensiy.Moreoverasignifcantincreaseinthevalueofnesimposedbytheregulatorshouldbeexpected.ThisisalreadyhappeningincountriesliketheCzechRepublicwheretheregulatorhasseizedundsinexcesso1bnCZKrepresentingahistoricmaximumorthecountry.OverthenextthreeyearsmemberfrmsAMLclientsareexpectedtocontinuetoocuseortsonurtherintegratingandreconcilingFATCArequirementswithKYCsystemsandotherexistingAMLinrastructure.IdentifcationobenefcialownersandtreatmentoPEPsisalsoexpectedtoremainacentralocusorbothourclientsinbankingaswellastheregulatorsparticularlyinlinewithregionalanti-briberyandcorruptionlegislation.ThereisfnetuningoAMLlegislationintheregionparticularlyinRussiaalthoughimplementationremainsachallenge.CentralandEasternEuropeancountriesarestillimplementingtherequirementsothe3rdEUAMLDirectivebutnowhavetoanticipateadditionalchangesbroughtaboutbythe4thDirective.DmitryChistovHeadoAMLandComplianceSystemsorKPMGinRussiaCentralandEasternEurope2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 64RegionalCommentaryNorthAmericaWithfneshittingrecordhighsandsomeothemostprominentoglobalfnancialinstitutionsacingenorcementactivityintheUSitisnowonderthatAMListopomindorNorthAmericanfnancialinstitutions.SeniorlawenorcementandregulatoryofcialsalikehavemadeplaininpublicaddressesthatintheirviewmanyfnancialinstitutionsstillotenmissthemarkwhenitcomestothedeploymentoconsistentlyeectiveAMLprograms.VerypublicscrutinyhasbeendirectedatbanksnotonlyromenorcementauthoritiesbutrompoliticiansaswellwiththeUSCongressundertakinginvestigationsandproposingenhancedlegislation.Ofcialstalkonotonlyholdingfrmsresponsibleorprogramailuresbutoholdingindividualsaccountable.SurveyResultsActiveinterestinAMLattheseniorlevelsisatanalltimehigh.OnehundredpercentoNorthAmericanrespondentsreportedthattheirBoardsoDirectorstookanactiveinterestinAML.Thisisalmostdoublethenumberreportinginterestinourlastsurvey58percent.Whileonly50percentreportthatAMLisormallydiscussedbytheBoardquarterlydownrom64percentthismaybebecauseanother17percentdiscussAMLasneededwhichmaybemorerequently.BoardsoDirectorsarealsolearningwhattheyneedtoknowtomakeinormeddecisions70percentorespondentsreportedthattheirBoardsreceiveAMLtraining.SpendingContinuestoIncrease.InvestmentinAMLhasalsoincreasedwithnosignoslowing.Inourlastsurvey64percentorespondentsreportedanincreaseininvestmentintheprecedingthreeyears.Now88percentreportthatcostshaveincreasedinthelastthreeyearswith33percentreportingthatincreaseasbeingbetween50and100percent.Seventy-eightpercentexpectcoststocontinuetoincreaseoverthenextthreeyearswith11percentexpectingthosecoststoincreasebyover100percent.NotasinglefrmsurveyedexpectstospendlessonAMLcomplianceinthecomingyears.ThisbegsthequestionwhatarefrmsspendingresourcesonThebiggestresponsescameintheareasotransactionmonitoringandrecruitingwith78percentorespondentsreportingspendinginboththeseareas.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 65Transactionmonitoringremainsachallenge.Despitetheincreasedspendontransactionmonitoringrespondentsgivetheirsystemslowsatisactionscores.Onave-pointscaleNorthAmericanrespondentsratetheirsystems3.33lowerthanWesternEuropeCentralandSouthAmericaRussiaCentralandEasternEuropeandOshoreLocations.PerhapsthisisarefectionothelowconversionrateromalerttoSARas78percentorespondentsreportthat5percentoreweralertsresultinSARswith22percentreportingaconversionrateunder1percent.Thisisnotasaresultolackoattentiontosystemsinplace89percentreportthattheytestandvalidatetheirtransactionmonitoringscenariosandthresholdsand66percentreportregularlytuningsystems.Muchothismaybeinresponsetorecentregulatoryrequirementsthattransactionmonitoringsystemsbesubjecttomodelvalidationandregularlytestedtoensurethemodelsareworkingeectively.Perhapstheincreaseincostsexplainsthechangeinresponsetosurveyquestionsaboutoutsourcingando-shoring.Inourlastsurveyin201197percentoNorthAmericanrespondentsreportednoappetitetooutsourceoroshoreunctions.Now30percentacknowledgethegrowingtrendtooutsourceoroshoreAMLunctions.CustomerDueDiligenceoHeightenedFocus.CustomerDueDiligenceCDDremainsasignicantocusorrespondents.IndeedmorerespondentsreportedCDDasanareaoregulatoryocusthananyotherareawith78percentorespondentsselectingthisasoneotheareasoconcern.OtherareasregulatorshaveocusedonareInternalAudit67percentandsanctionscompliancewiretransersandtransactionmonitoringeach56percent.ItisnotsurprisingthatCDDisaocusinparticularintheUSwithpendingregulationexpectedtobereleasedinthenearuturemandatingthatrmsbetterunderstandownershipandcontrolotheirclients.Perhapsinanticipationothis70percentosurveyrespondentsreportobtainingultimatebenecialownerUBOinormationontheirHighRiskcustomersandonthosewhoarePoliticallyExposedPersonsPEPs40percentreportobtainingsuchinormationonMediumRiskcustomersand30percentreportobtainingUBOinormationevenontheirLowRiskcustomers.Fitypercentorespondentsobtainidenticationonsignicantcontrollerswhile30percentobtainullidenticationonintermediateowners.Whilemanyrespondentsappeartoapplymorescrutinytotheirriskierclientsitwassurprisingtolearnthatenhancedocusisnotappliedmorewidely.Forexampleonly60percentorespondentsreportedrequiringmanagementsign-owhentakingonaHighRiskCustomer.Thisisparticularlyinterestinggivenrecentstatementsbyregulatorsandlawenorcementocialsnotinganappetitetoholdindividualbankersaccountableortheirrmsailures.Similarlyonly60percentormsreportcollectinginormationonsourceowealthortheirHighRiskandPEPclients.Giventhependingregulationthisshouldbeexpectedtochangeinthenearuture.Respondentsdoappeartoapplyscrutinyincaseswherenegativenewshasbeenidentiedpertainingtoaclientotheirs.NinetypercentorespondentsmonitorHighRiskclientswherenegativenewshasbeenidentifedand80percentrequiredocumentationonwhyaclientwithnegativenewsisbeingon-boarded.Seventypercentorespondentsreportthattheysubscribetoservicesthatprovideon-goingnegativenewsmonitoringthuskeepinguptodateonchangesreportedontheirclients.Sanctionscomplianceremainsanareaoconcern.Sanctionsremainanareaoconcernormanymemberrmsclients.Thisisnotsurprisinggiventhecontinuedenorcementactivityinthisareaovertheyearssinceourlastsurveywithnesstillinthehundredsomillionsodollars.FirmscontinuetobechallengedwithcompliancewiththeregulationsimposedbytheUSDepartmentotheTreasurysOceoForeignAssetsControlOFAC.ActionsorOFACbreachescontinuetocomeatrmsrommultipleregulatorsandlawenorcementagenciesincludingtheUSDepartmentoJusticeandstateandlocallawenorcementandregulators.PriortothereleaseoourlastsurveytheMT202COVmessagetypewasreleasedinaneorttodrivemoretransparencyinwiretransersandreducetheopportunityorcircumventingsanctionslterdetection.Whileinthatsurveyjustoverhalorespondentsreportedusingthatmessagetypenow80percentreportusingitand60percentwillrejectincomingMT202COVswherethereismissinginormation.SeventypercentoNorthAmericanrespondentsreportmonitoringallpaymentsormissinginormation.ThemajorityoNorthAmericanrespondentsappearsatisedwiththeirinterdictionsystems80percentreportthattheirsystemsareeectivealthoughonly60percentreporttestingtheirsystemsannually.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 66RegionalCommentaryManyfrmsarecontinuingtogrowtheirdepartmentsandincreasespendinaneorttodomoreotenreactingtotheenorcementenvironment.Whileitisunlikelytherewillbeanyeasinguporegulatoryscrutinyintheyearsaheadwequestionwhethertheincreasedocusontestingandmodelvalidationcanhelpfrmstakeastepbacktoconsiderhowtheyareapproachingdifcultissuesasopposedtohowmanyresourcestheyapplyorhowbigtheirprogramswillgrow.Whileitiscriticaloraprogramtoberightsizedandadequatelyresourcedtocombatmoneylaunderinginacomplexbusinessenvironmentitisequallycriticalthatprogramsbetargetedtoaddressthespecifcrisksathand.TeresaPesceKPMGsHeadoAMLortheAmericasregionNinetypercentorespondentsreportedthat0.5percentorlessosystemstopsorhitsaretruesanctionsmatcheswith40percentreportingthatlessthan0.1percentohitsaretruematches.Thisexplainswhyrespondentsviewkeepingupwithandprocessingthevolumeohitsasthebiggestchallengeinsanctionscompliance.Increasedregulatoryfocusiskeydriver.WhenaskedwhatwasmostchallengingaboutAMLcompliancehighestscoreswenttomeetingnewregulatoryrequirements.Onascaleoonetofvethiswastheonlyresponsescoringoverour.Respondentspermittedtoselectallthatappliedreportedthatthepaceoregulatorychangeandassociatedcostswerethebiggestchallengestomeetingexpectationsat78percentand89percentrespectively.Otherchallengeswerefndingqualifedresourcesat44percentandalackoregulatoryguidanceat33percent.WhenthequestionwasposedaswhatdoyouthinkareyourAMLpersonnelstopthreegreatestconcernstherewasathreewaytieorfrstplacebetweenthepaceandimpactoregulatorychangeregulatoryvisitsandlackoqualifedpersonnel.Eightypercentorespondentsnamedallthreeareas.Amajority67percentwantmoreguidanceromtheirregulatorssignallinganeedorenhancedcommunicationinadvancebeorefrmsareacingpotentialenorcementactivity.OutlookAtthetimeoourlastsurveyitwasnotedthatincreasedfnesandregulationsignalledthattheUSinparticularwouldcontinuetotakeahard-linedapproachtoenorcementandwepredictedthattherewouldbenosubstantialorpracticaleasingotheregulatoryburdensacedbyfnancialinstitutionsintheregion.Thepastthreeyearshaveproventhatandmore.WithCongressionalandpublicscrutinynotonlyocusedonthebanksbutonthebankingregulatorsthemselvesthechancesoanyeasingotheburdenappearstobenil.ThisisurtherreinorcedbystatementsmadebyseniorUSlawenorcementofcialsandregulatorstotheindustrythatmanyinstitutionsdonotappeartohavedoneenoughtocombatmoneylaunderingandterroristfnancing.Firmscontinuetogrowtheirdepartmentsandincreasespendinaneorttodomoreotenreactingtotheenorcementenvironment.Whilethereisnotexpectedtobeanyletupintheyearsaheadwequestionwhethertheincreasedocusontestingandmodelvalidationmaycausefrmstotakeastepbacktoconsiderhowtheyareapproachingdifcultissuesasopposedtohowmanyresourcestheyapplyorhowbigtheirprogramswillgrow.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 672014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 68RegionalCommentaryInterestinAMLattheseniorlevelsconsistencyotreatmentohighriskcustomersandsanctionscreeningcouldbeimprovedparticularlyastheregionstrugglestokeepupwiththepaceoregulatorychange.CentralandSouthAmericaSurveyResultsAMLstillofinterestbutsomewhatdecreased.Whereasinourlastsurvey96percentorespondentsromtheCentralandSouthAmericanregionreportedthatAMLwasahighpriorityortheirBoardsoDirectorsconsideringAMLatleastquarterlyinthissurvey80percentorespondentsreportedthattheirBoardswereactivelyinterestedinAMLissues.FortypercentreportedthattheirBoardsconsiderAMLissuesquarterlywhileanother40percentdiscussAMLasneeded.Thisisinterestingconsideringthat100percentorespondentsreportedthattheyconsidermoneylaunderingahighriskortheirinstitutions.KYCforPEPsappearsstrongbutfurtherprogresstobemade.CentralandSouthAmericanrespondentsreportedstrongproceduresaroundPEPs.OnehundredpercenthaveprocedurestoidentiyPEPssimilarly100percenthaveprocedurestoobtainsourceowealthinormationorPEPs.AndallrespondentsreportedteachingthebusinessaboutthebriberyandcorruptionrisksassociatedwithPEPs.Howevertheresponseisnotuniormorothercategoriesocustomers.Two-thirdsorespondentsreportobtainingultimatebenefcialownerUBOinormationonHighRiskCustomersalthoughnonereportobtainingsuchinormationorMediumorLowriskcustomers.Two-thirdsalsoreport2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 69Bankingisaglobalbusinessandregulatorsworldwideareincreasingscrutinyontheinstitutionstheyregulate.Inadditiontoaddressinghomecountryrequirementsbanksmustbemindulolawandregulationwherevertheydobusiness.TeresaPesceKPMGsHeadoAMLortheAmericasregionobtainingsourceowealthinormationorHighRiskCustomers.Allhoweverreportrequiringseniormanagementapprovaltoon-boardahighriskcustomer.Sanctionscomplianceremainsachallenge.Whenaskedwhatthebiggestchallengesaretosanctionscompliancehighestmarkswenttothequalityandcompletenessodataandtotheblockingocustomeraccounts.Onethirdorespondentsdontbelievethattheirsanctionssotwareiseective.Twothirdsorespondentsreporttestingtheirsystemsatimplementationonethirdreporttestingquarterly.LikeotherrespondentsCentralandSouthAmericanrespondentsreportalowconversionrateromalerttotruesanctionshitone-thirdsaylessthan0.1percentaretruematchesone-thirdsaybetween0.1and0.5percentaretruehitsandtheremainderdontknowwhattheirhitratesare.Keepingupwithregulatoryrequirementsrepresentsbiggestchallengetobusiness.Respondentswereaskedtoratewhichareaswerethemostchallengingtotheirbusinesses.InCentralandSouthAmericathehighestscorewenttomeetingnewregulatoryrequirementswithprotectingtheirrmsreputationsandimplementingagloballyconsistentAMLrameworktiedorsecond.Whenaskedwhatthegreatestchallengesaretoregulatorycomplianceallrespondentsreportedthatthepaceoregulatorychangewasoneothegreatestchallengeswiththecostocomplianceandresourceconstraintstiedorsecondplace.OutlookWhilemanyrespondentsinCentralandSouthAmericaexpectspendonAMLcompliancetogodowninthecomingyearslikeotherstheynditchallengingtomeetregulatoryrequirementsespeciallyinlightoregulatorychange.ItisnotuncommonorsurveyrespondentstounderestimatethetotalAMLexpenditureandsotheregulatorypaceochangeshouldbeexpectedtoremainakeydriverbehindAMLinvestment.CentralandSouthAmericaarelikelytoexperienceincreasedlegislativeinitiativesregardinganti-moneylaunderingrequirementsparticularlyasNorthAmericaandFATFcontinuetoinfuencethepaceochangeintheregion.ManyothecountriesinthisregioncouldstillbeconsideredemergingeconomieswheregovernmentoversightandAMLregulationisstillcontinuingtobedeveloped.WiththisinmindmemberrmsclientsareexpectedtocontinuetoocusonaddressingtheaboveconcernsbutalsoproactivelymanagingotherareasoconcernsuchasFATCArequirementsandtransactionmonitoringconcernsinlinewithourglobalndings.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 70RegionalCommentaryOffshoreLocationsWithintheoshoresectortherehavebeensignicantdierencesinthematurityoAntiMoneyLaunderingAMLlegislationandregulation.TheoshoresectorisverydiverseintermsoAMLregulatorymaturityandassuchcertainresponsesrefectthatdiversity.SurveyResultsRegulatoryfocusvariedacrossoff-shorejurisdictionslikelyinlinewiththedegreeomaturitydierenceswithregardtoAMLregulationandlegislation.RegulatorsinthemorematureoshorejurisdictionsinAMLtermsareocusingmorenowongranularaspectsoimplementationotherisk-basedapproachorcompliancewithsanctionsnoticerequirements.Thisincludesprovidinggreaterlevelsosector-basedregulatoryguidance.IncontrastregulatorsinthejurisdictionsatearlierstagesintheirdevelopmentoAMLregulationsarestillocusingonbasicimplementationsuchasgeneratinglegislationandissuanceoguidance.WhenconductingregulatoryonsitevisitsregulatorsinthesejurisdictionsaregenerallyocusedonensuringthatpoliciesandproceduresareuptostandardandbasicKYCdocumentsarebeingcollected.Duringthedecadepriorto2011jurisdictionssuchastheIsleoMantheChannelIslandsMaltaandBermudaenhancedtheirAMLlegislationandregulationtomeetAMLrequirementscommensuratewithinternationalstandards.SomeCaribbeanjurisdictionshavehoweveronlysincethenimplementedsignicantchangestotheirAMLlegislationandregulationmainlytomeettheexpectationsotheInternationalMonetaryFundIMFandtheFinancialActionTaskForceFATF.Inmanycasespracticalimplementationothechangesisstillanongoingprocess.Costsofcompliancecontinuetoincreaseacrosstheboardinmatureanddevelopingoffshorejurisdiction.TheincreaseinsuchjurisdictionsappearedtobelinkedtoincreasingdemandsorAMLresourcesincludingexperiencedAMLresources.Thesearecoststhatoshorebusinessesinparticularsmallerbusinesseshavestruggledtopassontocustomersgiventheeconomicenvironment.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 71TheIMFinspectionprocessisanimportantpartoglobaleortstocombatmoneylaunderingandterroristfnancingactivities.Oshorejurisdictionsunderstandtheparttheyplayandconsiderableeortshaveandcontinuetobemadebyoshoreregulatorstoaddressthisrobustprocess.CharlesThreshHeadoForensicKPMGsOshoreGroupOutlookFocusareasoroshorejurisdictionscurrentlyandinthenextthreeyearswillbetheimplementationonationalriskassessmentsandtheharmonisationoAMLrequirementswiththerequirementsoautomaticexchangeoinormation.Manybanksnolongerwishtoplacerelianceonthecustomerduediligenceundertakenbyintroducersandseemtobeincrediblyriskaverseintermsothebusinessthattheyarewillingtoaccept.Thisisparticularlytrueinrespectoaccountsbeingintroducedtothebanksbytrustcompaniesandcorporateserviceproviders.RegulatedinstitutionsarerequiringgreaterlevelsodocumentationromcustomerstomeetAMLregulatoryrequirementsandcustomerawarenessandacceptanceotheneedtoprovidethisinormationhaschanged.WithFATCAandothertaxrelatedsharingagreementsbeingsignedthelevelodocumentationbeingrequestedromcustomerswillcontinuetoincrease.JurisdictionswhichmightbeconsideredinthedevelopmentstageomeetinginternationalstandardsoAMLregulationsareexpectedtoexperiencesignifcantchangeoverthenextthreeyearsparticularlyinthelevelsoactivityromlocalregulatorsinthosejurisdictionsaroundtheissuanceoAMLguidancenotesandonsiteinspections.2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 72RegionalCommentary2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 732014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 74AmericasRegionArgentinaDiegoBlegerdblegerkpmg.com.ar541148915637BermudaCharlesThreshcharlesthreshkpgm.bm14412955063BrazilGeronimoTimermangeronimotimermankpmg.com.br551121833006ChileAdrianoMucelliaumucellikpmg.com56227981565CanadaJamesMcAuleyjmcauleykpmg.ca14167773607ColombiaIgnacioCortesignaciocortes1kpmg.com5716188000MexicoShelleyHayeshayes.shelleykpmg.com.mx525552468634UnitedStatesLaurenceBirnbaum-Sarcylbirnbaumsarcykpmg.com12128725808TeresaPescetpescekpmg.com12128726272ContactusAMLleadsinKPMGmemberfrmsEuropeMiddleEastAfricaRegionAustriaGertWeidingergweidingerkpmg.com4373269382107BelgiumHildeDeCremerhdecremerkpmg.com3227083787CentralandEasternEuropeMichaelPeermpeerkpmg.com420222123359FranceJulienGenouxjgenouxkpmg.r330155686704GermanyBerndMichaelLindnerblindnerkpmg.com498992821368IndiaSuveerKhannaskhannakpmg.com912230902540IrelandNiamhLambenlambekpmg.com35317004388ItalyGiuseppeDAntonagdantonakpmg.it3906809711KenyaWilliamOelofsewoelosekpmg.co.ke254202806000LuxembourgSandrinePeriotsperiotkpmg.com3522251517220MaltaJuanitaBencinijuanitabencinikpmg.com.mt35625631143MiddleEastKauzalAliRizvikalirizvikpmg.com97144248949NetherlandsLeenGroengroen.leenkpmg.nl31206567618NorwayHenningAdlerGravklevhenning.gravklevkpmg.no4740639541PolandAgnieszkaGawronska-Malecagawronska-maleckpmg.pl48225281286PortugalJooMadeirajmadeirakpmg.com351212487374RussiaandCISDmitryChistovdchistovkpmg.ru74959374428SouthAfricaTersiaRossouwtrossouwkpmg.com27827190300SpainEnricOlcinaeolcinakpmg.es34932532985SwedenMartinKrugermartin.krugerkpmg.se4687239199SwitzerlandPhilippeFleurypfeurykpmg.com41582493753UnitedKingdomBrianDilleybrian.dilleykpmg.co.uk442078964843NealDawsonneal.dawsonkpmg.co.uk442076945552ZimbabweEmiliaChisangoemiliachisangokpmg.com26343026002014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberirmsotheKPMGnetworkareailiated. 75AsPACRegionAustraliaJeremyAllanjallan1kpmg.com.au61398384571ChinaKyranMcCarthykyran.mccarthykpmg.com85221402286RachelLayburnrachel.layburnkpmg.com861085087075GrantJamiesongrant.jamiesonkpmg.com85221402804HongKongMacauDavidHsudavid.hsukpmg.com85228475104IndonesiaDavidEastdavid.eastkpmg.co.id62215740877JapanChiharuYamazakicyamazakikpmg.com81335485107KoreaYongSooParkyongsooparkkr.kpmg.com82221120421MalaysiaSukdevSinghsukdevsinghkpmg.com.my60377213388NewZealandMichalAmzallagmamzallagkpmg.co.nz6493633218PhilippinesHenryAntoniohantoniokpmg.com6328857000SingaporeChinKokLemclemkpmg.com.sg6562132495JasonTanjtan11kpmg.com.sg6562132807TaiwanVincentChangvwchangkpmg.com.tw886281016666ThailandChristopherSaunderscsaunders2kpmg.co.th6626772359GanesanKolandeveluganesankpmg.co.th6626772767DouglasWebbdouglaskpmg.co.th6626772766VietnamCambodiaJohnDittyjdittykpmg.com.vn848382192662014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 76AcknowledgementsWewouldliketothankallofourAMLteamsfortheircontributiontothesurveyinparticularmembersoftheprojectandeditorialteamJeremyAllanKPMGinAustraliaSteveBarkhuizenKPMGintheUKManetBassonKPMGinSouthAfricaThomasCamenischKPMGinChinaDmitryChistovKPMGinRussiaColinDarbyKPMGintheUKBrianDilleyKPMGintheUKClaireFranklinKPMGintheUKJamesGrantKPMGintheUKDavidHarperKPMGintheBermudaDavidHsuKPMGinChinaKyranMcCarthyKPMGinChinaNinaMehraKPMGinChinaEnricOlcinaKPMGinSpainMichaelPeerKPMGinCZTeresaPesceKPMGintheUSJodiSchutzeKPMGintheUKJasonTanKPMGinSingaporeChiharuYamazakiKPMGinJapan2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. 2014KPMGInternationalCooperativeKPMGInternational.KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. EuropeMiddleEastandAricaEnricOlcinaT34932532985Eeolcinakpmg.esAmericasTeresaPesceT12128726272Etpescekpmg.comAsiaPacifcKyranMcCarthyT85221402286Ekyran.mccarthykpmg.comRegionalAMLleadersContactUsGlobalHeadofKPMGsAMLServicesBrianDilleyT4402078964843Ebrian.dilleykpmg.co.uk2014KPMGInternationalCooperativeKPMGInternationalaSwissentity.MemberfrmsotheKPMGnetworkoindependentfrmsareafliatedwithKPMGInternational.KPMGInternationalprovidesnoclientservices.NomemberfrmhasanyauthoritytoobligateorbindKPMGInternationaloranyothermemberfrmvis--visthirdpartiesnordoesKPMGInternationalhaveanysuchauthoritytoobligateorbindanymemberfrm.Allrightsreserved.TheKPMGnamelogoandcuttingthroughcomplexityareregisteredtrademarksortrademarksoKPMGInternational.DesignedbyEvalueserve.PublicationnameGlobalAnti-MoneyLaunderingSurvey2014Publicationnumber130934PublicationdateFebruary2014kpmg.comappkpmg.comsocialmedia