Asian financial services companies are poised to spend a record amount upgrading the software systems they use to monitor illicit fund flows as they seek to overcome a persistent shortage of anti-money laundering specialists.
Spending on technology for anti-money laundering and customer screening might rise to US$300 million next year in Asia from this year’s estimated US$260 million, Boston-based research firm Celent said.
The software upgrades will help some banks offset rising staff costs, following a near-20 percent increase in salaries for experienced anti-money laundering specialists over the past three years.
“A lot of banks are just putting on people, putting on people, putting on people,” DBS Group Holdings Ltd head of financial crime and security services Richard Moore said. “We’ve now taken a different approach: Let us develop infrastructure, let us bring on different skills of people to help us control the volume of work we have to do.”
Hong Kong and Singaporean regulators have in recent years required banks to monitor tax evasion and made them liable for prosecution should they fail to maintain procedures to vet money flows. That has caused a hiring spree that has driven up the number of anti-money laundering (AML) personnel in both places by at least seven times in the past five years, as well as the associated salary costs.
AML officers are responsible for analyzing the profiles of prospective customers to establish whether to accept them as clients and open accounts for them. They also vet transactions from money transfers and private banking to trade finance to determine the sources of funds and how they will be used. Any doubtful dealings are reported as suspicious transactions to regulators.
Amid the competition for talent from other banks that has driven salaries higher, Moore said he has “struggled” to expand his financial crime and security services personnel beyond 160 from the current level of 65.
HSBC Holdings PLC hired more than 2,200 people globally, principally for financial crime compliance, in the first six months of this year, the London-based bank said on Saturday last week.
“It’s really tough to develop and keep talent in the current environment,” Moore said. “As we start to develop people, they get an offer to go somewhere else for a significant uplift, and they move on.”
Singapore’s most-experienced anti-money laundering officers can expect a base of at least S$190,000 (US$135,000) this year, 19 percent higher than in 2012, according to a Robert Walters survey. Those with at least eight years’ experience in Hong Kong can expect as much as HK$2 million (US$258,000), which is the same as the city’s top-paid investment bankers when bonuses are excluded, data from the recruiter show.
To support its existing personnel, DBS in April started upgrading the software system it adopted in 2007, said Moore, who is also tapping employees from other areas within the bank to support his AML team. These efforts have allowed DBS to cut the volume of false alerts that pop up on its surveillance screens by about 40 percent in the past 12 to 15 months, he said.
In Singapore, increased surveillance boosted the number of suspicious transaction reports filed by institutions in the city by 30 percent to 29,082 last year from the previous year, government figures show.
About 25,000 of those reports were filed in Hong Kong in the first eight months of this year, or 67 percent of last year’s record amount, the city’s Joint Financial Intelligence Unit said on its Web site.
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