Regulators need to do more to allow new technologies that could help in the fight against money laundering, as financial institutions are struggling with ever-growing compliance costs, an Asia finance industry group said recently.
Banks have been slapped with vast sums for not preventing money being laundered through their accounts, and the call for action comes after Commonwealth Bank of Australia last week was fined a record $530 million for breaching money laundering and terror financing laws.
The Asia Securities Industry and Financial Markets Association said it would like to see greater use of new technologies in “know your client” or KYC anti-money laundering checks, as they promise to drastically cut costs. “Fintech solutions, facial recognition for example, hold out great hope for the industry, but haven’t been embraced as quickly as some might like by regulators around the world,” said Mark Austen, chief executive of the association.
The Hong Kong Monetary Authority and the Monetary Authority of Singapore said last year they were exploring whether KYC utilities, central repositories of data that banks can tap to save duplication when adding new clients, should be set up.
Editorial Comment: Based on anecdotal and real experience banks should be more worried about the negative impact on clients because of the use of largely manual compliance methods. The process is not only time consuming for banks and clients, but also disrupting banking relationships by bank enforcing compliance by freezing accounts.