FICO: APAC Banks Still Fear for Next Money Laundering Breach
FICO President for Asia Pacific Dan McConaghy.

JAKARTA (TheInsiderStories) – Following the recent Asian money laundering scandal, there were around 91 percent of Asia-Pacific (APAC) banks thinking that the industry is still at risk of accidentally facilitating subsequent money laundering scandals, told FICO in the recent survey today (02/27).

Based on the reports, most of respondents (62 percent) say that lack of resources is the biggest reason why APAC banks remain open. While 25 percent mentioned a lack of expertise, and 13 percent indicated due to political constraints imposed by the government.

While from the bank, when asked about the most effective way to improve money laundering compliance, the majority (42 percent) of APAC banks believe the best way to deal with money laundering is to introduce anti-money laundering solution that uses machine learning.

“Asia’s reputation for financial probity may take a long time to recover fully and it seems that our region’s bankers agree that we are just at the start of a compliance technology and process overhaul that may take many years to complete,” said FICO President for Asia-Pacific Dan McConaghy in the report.

He explained, with fines of up to US$100 million imposed on banks in Asia because of money laundering compliance failures, as well as the departure of many CEOs and even the closing of a number of lenders, the risk for banks can be very high.

“We have seen fines of up to $100 million imposed on banks in Asia for money laundering compliance failures, as well as the departures of numerous CEOs and even the shuttering of some lenders,” he added.

So the risk for banks can be very high, which is why so many lenders are realizing the need to dramatically improve the efficacy of compliance operations, using machine learning for AML, added McConaghy.

Moreover, the survey revealed that 40 percent of banks felt that their abilities were average, while they knew how they could be compared to their industry counterparts. Only two percent said that their AML-made behavior was recognized by the best performing players in the industry.

But, most are optimistic about their anti-money laundering capabilities in the future (61 percent of respondents believe that their AML approach will be better in one year).

“High false positives and inefficient processes are one reason that the vast majority of money laundering is going unstopped, said McConaghy.

McConaghy said that this problem is a big problem that must be solved immediately, because currently it is estimated that the amount of annual money laundering is around 2-5 percent of global gross domestic product.

Moreover, there was concern that a new type of transaction outside the banking sector had occurred which had an impact on the risk of money laundering in the region.

APAC banks surveyed gave crypto-currency ratings (33 percent), shadow banking (22 percent) and property transactions (20 percent) as the biggest risks. Chinese banks, for example, are concerned with crypto-currency (46 percent) and the risk of shadow banking (40 percent).

“To achieve better anti-money laundering detection, financial institutions must help their compliance employees filter out huge amounts of data, more efficiently report suspicious activity to regulators and improve their tools,” McConaghy stressed.

Therefore, he suggested that banks include AI-driven machine learning and analytics to prioritize warnings and accelerate decisions to ensure banks can go beyond what a rule-based system can do to capture new types of money laundering.

Written by Daniel Deha, Email: