Middle East Urged To Do More To Fight Financial Crime

The Middle East needs to do more to reduce its vulnerability to financial crime by implementing tougher anti-money laundering regulation, a new study has found.

According to KPMG’s anti-money laundering (AML) survey, the importance of implementing measures against financial crime is on the rise both globally and regionally.

Around 88 per cent of respondents said that AML has emerged as a key focus area for senior management.

The survey drew 317 respondents from AML-related professional backgrounds from across 48 countries.

Although Middle Eastern countries have been increasingly focused on improving AML measures, the survey said that the region still faces some “significant challenges around compliance, especially with regard to customer due diligence, transaction monitoring, and Politically Exposed Persons (PEPs) identification.”

One of the major concerns for Middle Eastern banks in the AML and customer due diligence technology space is a lack of data consistency, KPMG noted.

“As a rapidly developing region, the Middle East needs to take a more proactive approach towards reducing its vulnerability to financial crime and create infrastructure which will facilitate effective AML enforcement,” said Kauzal Ali Rizvi, director consulting, KPMG Lower Gulf.

“The AML survey indicates that 92 per cent of respondents considered AML a high risk area.

“Furthermore, the political and civil unrest in the Middle East continues to pose a challenge for financial institutions’ sanctions screening systems in terms of responding to rapid changes to sanctions lists and their increased volumes.”

Investments in AML are also on the rise, with around 78 per cent of respondents saying that they had increased their expenditure. Almost 74 per cent of firms are expecting to further increase their AML spend over the next few years.

A lack of qualified resources, the pace and impact of regulatory change and overall training were the three main concerns on the AML agenda of banks surveyed from the Middle East and Africa

The survey noted that the UAE has been pro-active, criminalising the act of money laundering in 2002 with both the UAE Central Bank and Dubai International Financial Center issuing various AML regulations.

However, the majority of respondents from the region said that they would like their regulatory authorities to become more involved in the globalisation of AML standards and learn from their counterparts in improving their regulatory approach.

A recent PwC survey also reported high rates of economic crime in the Middle East, with 21 per cent of companies in the region experiencing incidents of economic crime overall.

The direct financial impact of economic crime remained high, the survey said.

Around 12 per cent of respondents reported a loss of $5 million over the past two years, with half of these incurring a loss of $100 million.