Only 1 in 5 of APAC banks has an AML compliance strategy: study

Only 8% have an integrated system or specific executive to report these functions.

Only 18% of Asia Pacific banks have a strategic plan to integrate their fraud and anti-money laundering (AML) compliance functions, a survey by analytics software firm FICO revealed. This is despite the fact that 71% say that convergence will improve the ability to stop fraud and financial crimes.

This puts their planning efforts significantly behind that of their Western peers, where 24% of US banks and 47% of UK banks had strategic plans to fully integrate functions, based on a separate FICO survey.

Of the 45 APAC banking executives interviewed by FICO, only 8% said that they have an integrated line or a specific business executive to report their fraud and AML compliance functions.

Instead of an integrated system, banks utilise separate or low levels of security collaboration, with 95% of APAC banks nominating controls, 94% citing detection systems, and 91% indicating investigative systems as areas in which they have low levels of collaboration or are separated altogether.

In contrast, 82% of UK banks reported either full integration or a high level of collaboration for detection systems, and 76% for controls.

“Overseas banks have moved to convergence sooner in response to new criminal threats and punishing fines,” said Timothy Choon, FICO’s compliance lead in APAC. “The same is happening in Asia Pacific but the pace has been slower due to different regulation, lower losses and a more fragmented market. The historical legacy of separate departments and leadership is also a factor, as there has been more change at the top overseas, which hastens the integration process.”

Meanwhile, 38% of regional banks are instead actively looking at a more tactical approach by actively sharing resources where synergies exist. Examples of this include the sharing of data, controls or staff.

“While the vast majority of banks in the Asia Pacific understand the benefits of integrating their financial crime functions, they are not currently as integrated as banks in other countries and don’t intend to integrate as tightly,” he added. “Their timescales to achieve their plans are ambitious however, so in addition to watching for the best practices of the first-movers, they will also need to adopt the best of new breed of technologies that have been developed to work across fraud and financial crime.”