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Deccan Herald » Business » Detailed Story
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FINANCE / Banks need to invest on technology
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Money laundering touches $1.5 trillion globally
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DH News Service Mumbai:
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Money laundering is the process by which criminals attempt to hide the true origin of the proceeds of their activities to avoid prosecution.
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There has been a significant increase in suspicious activity involving fund transfers across the globe as per the survey done by KPMG, a leading international management consutancy firm.
KPMG has estimated that annually funds worth a whopping US $590 billion to $1.5 trillion are laundered through the global economy which amounts to two to five per cent of the global GDP.
According to KPMG officials, the awareness about money laundering has gone up but banks would need to spend considerably on technology to ensure that laundering does not take place. KPMG said money laundering is the process by which criminals attempt to hide the true origin of the proceeds of their activities to avoid prosecution.
Earlier, money laundering was aligned with crimes such as drug trafficking or economic crimes such as fraud, and theft. However, more recently it is being linked with other crimes like financing of terrorism, trafficking in people, tax evasion, etc.
When asked about money laundering from India, Mr Colin Lobo, Associate Director, KPMG said parallel ecoomy in India is estimated to be nearly 40 per cent of the country’s GDP and part of that money could be getting laundered.
He pointed out the quantum of money laundering could not be ascertained for sure as criminals would not like to keep any record of the same. Besides, sometimes money donated for a charity by bonafide persons could eventually found its way for terrorism. So it is difficult to pinpoint a number and KPMG has arrived at the figure on laundering on some “guesstimates”. Globally money laundering is $590 billion on the lower side and as much as $1.5 trillion on the higher side.
Big challenge
KPMG has said money laundering poses big challenge to the global economy and it would be good for the banks and financial institutions to adhere to the guidelines stipulated by the Reserve Bank of India to check the menace. For, if they do not do it, they could become subject of negative publicity in the marketplace as any association with money laundering could lead to serious operational and reputational risks which eventually could lead to severe economic losses.
As per KPMG survey conducted globally which included some 100 odd banks and financial institutions from India, banks have to process voluminous data everyday which is mainly in the nature of details of large number of low-value transactions and it would be difficult to monitor so many transactions without deploying proper technology.
The best way to check the menace of money laundering is to invest in technology which would help them monitor all the transactions put through the system. However, many banks worldwide have not yet implemented sophisticated IT monitoring systems which is worrying.
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Wednesday, April 20, 2005
