28 June 2005

Report on Anti-Money Laundering Requirements - Costs, Benefits and Perceptions

The Corporation of London and the Institute of Chartered Accountants in England And Wales (ICAEW) released a new report on Money Laundering. The study assesses the perceived costs and benefits of UK Anti-Money Laundering Requirements (AMLR) compared with other jurisdictions including the USA, Germany, France and Italy. It also examines how effective AMLR is and what impact the UK AMLR has on the competitive standing of the UK financial services industry.

Main findings include that AMLR costs in UK are significantly higher as a proportion of national GDP than in other major jurisdictions. It seems likely that other jurisdictions will incur greater costs in the future as they raise the level of their regulations towards the UK level.

Almost two-thirds of UK respondents said that AMLR were too severe in proportion to the risks of money laundering. Just over one-third of international respondents said that AMLR were too severe in proportion to the risks.

The rigorous implementation of international AMLR has not yet had a pronounced impact, either negative or positive, on the competitiveness of the UK as a financial centre.

The UK can become more effective at deterring money laundering by raising the perceived likelihood of money launderers being caught and the perceived severity of the punishments, rather than increasing the level of regulation further.

The effectiveness of the efforts against money-laundering can be enhanced by closing regulatory and communication gaps.

Michael Snyder, Chairman of the Corporation of London's Policy and Resources Committee said 'What we need to do is improve the way our AMLR is perceived and not increase the level of regulation still further. To this end we will work with our partners the ICAEW to urge national and European authorities to ensure future developments in AMLR are not introduced to the detriment of our international competitiveness.'

Felicity Banks, Head of Business Law at the ICAEW said: 'This report provides a timely reminder that perceptions do matter, and neither the financial services sector nor the professions are yet satisfied that all efforts are being directed in the most effective way.'

Report

NA