September 5 2017
As per the United Nations Office on Drugs and Crime (UNODC) estimate, each year, across the globe, the value of money that is laundered equate to 2 – 5% of the global GDP. In absolute term, this amounts to USD 800 billion – USD 2 trillion. Unsurprisingly then, governments and policy makers across the globe have been concerned with the rampant menace of money laundering. Over the years, financial institutions (FIs) too on their part, have made massive investments in strengthening their Know Your Customer (KYC)/Anti-Money Laundering (AML) processes and technology solutions. Further, this investment by FIs continue to rise with each passing year. As per the estimates from WealthInsight, globally, the spending on AML compliance is expected to cross USD 8 billion in 2017 (CAGR of ~9%). Today, many large multi-national banks spend over USD 500 million on their KYC/AML programs.
Alas, in spite of such heavy investments, FIs have been unable to optimally counter the growing peril of money laundering. Regulatory fines on FIs for KYC/AML related violations continue to rise.