Indian financial regulators have become more stringent in their outlook to money laundering and have become a member of the Financial Action Task Force (FATF) in late 2010, said a KPMG study.

“Along with the proposed amendment to the Prevention of Money Laundering Act, 2002 (through the Prevention of Money Laundering (Amendment) Bill, 2011 which is currently under review), regulators are also advising financial institutions to regularly assess money laundering risks in their proucts/services/transactions/delivery channels as well as to evaluate if their current policies and procedures mitigate those risks,” KPMG study said.

According to KPMG estimates $800 billion — $2 trillion is the amount of money laundered globally, approximately 2 to 5 per cent of the global GDP.

With the regulators becoming more stringent, 86 per cent of the respondent in the survey said that their senior management including board of directors take an active interest in AML (anti-money laundering) related issues and discussions.

Rohit Mahajan, partner and co-head, Forensic Services at KPMG said, “Organisations are using AML compliance as a parameter to measure senior management performance, which in turn is increasing accountability across organisational processes and products.”

In the KPMG survey, although, an increasing number of respondents (65 per cent) said they conducted periodic risk assessments either half yearly or yearly to evaluate their money laundering risks, a significant number (32 per cent) said they undertook this based on a change in product/ procedure or regulatory change.

Beneficial ownership meaning the person who ultimately owns an account or on whose behalf a transaction is conducted is now a key component in identifying sources of money laundering.The cost of AML compliance would increase by 10 to 20 per cent in coming years,