IT spend increased to control laundering

(SATISH KUMAR)  

Banks and financial institutions in the Middle East have increased their spending on anti-money laundering technology by 70 per cent over the past three years, as experts agree that IT rather than manpower is the future of financial crime fighting.

The Middle East, Africa and South Asia are expected to invest $6 billion (Dh22bn) in IT solutions to protect financial transactions in 2008 and 2009, according to the Middle East and North Africa Financial Action Task Force – a regional association of 14 countries formed to combat money laundering and terrorism financing. The Middle East’s investment alone is expected to reach $2bn (Dh7.3bn), a significant portion of which will be spent on anti-money laundering software and technology.

On the technical assistance front, the US State Department has said the Terrorist Finance Working Group has provided more than $11.5 million (Dh42m) to provide training to Middle Eastern and South Asian states to develop and reinforce counterterrorist financing and anti-money laundering regimes. Experts have said the region has to focus more on technology-intensive regulations and cut down on human capital to win the battle.

“Two thirds of the cost incurred by banks in the region is from the human capital they use to protect money. The cost of software investment is hardly seven to eight per cent of their total spending on anti-money laundering technology,” said George Faux, group executive, Sales and Relationship Management at Fortent, an American risk compliance service provider. Fortent has said it regulates 25 per cent of the world’s cash transactions through their systems, and 13 of the top 20 banks of the world use its software to combat money laundering.

“If you have the right technology, you do not need as many people involved to safeguard the cash flow. If used appropriately, the right technology can target money laundering effectively, and the Middle East region is in the evolving process of moving towards technology-intensive regulations from labour-intensive techniques,” Faux added.

Faux was in Dubai last week to launch a new version of Fortent’s anti-money laundering software at the Middle East-North Africa International Money Laundering/Terrorist Financing Conference and Exhibition, hosted in Dubai by the Association of Certified Anti-Money Laundering Specialists (ACAMS) and the Union of Arab Banks.

The latest offering from Fortent’s financial crime product suite, AML 6.0, streamlines the investigation process and provides deeper profiling of correspondent banking accounts, Faux said. This allows organisations to better comply with international and local regulatory standards and reducing the risk of enforcement penalties, he added.

For financial clients in the Middle East, Fortent AML displays Arabic data in addition to English.

While Fortent does not currently have an office in the region – it operates through service provides – Faux acknowledged that as business in the sector picks up in the region, firms will be at a disadvantage if they do not have a local presence.

Statistics

70 per cent – increase in information technology spend by banks and financial institutes over the past three years, as experts agree IT is the future of crime fighting

7.3bn – Middle East’s banking and financial institutes will invest to contain money-laundering, a significant portion of which will be spent on software and technology

14 – countries of the Middle East and North Africa are part of the Financial Action Task Force, an association to combat money laundering and terrorism financing

25 per cent – of the world’s cash transactions are regulated by Fortent, an American risk compliance service provider