Pointing out how a single person is able to monitor all transactions put through on the Nasdaq, Mr Sinor said each bank in the country should emulate/evolve such a system so that they do not unwittingly become parties to money laundering.
Emphasising that implementation at the ground level is key to effectively following AML measures, he said, the Association is working on detailed operational guidelines on AML, which will be unveiled shortly. The IBA chief was speaking after releasing the KPMG survey on anti-money laundering.
Underscoring the need for India to join the Financial Action Task Force, he observed that this will enable the country to have its own say in matters pertaining to AML and also facilitate sharing of various perspectives on a cross-country basis. The AML regime in India is in the first stage of implementation and it would take time for processes to settle down, Mr Sinor said.
When asked about evolving a code of conduct for recovery agents, he said, IBA was in the process of modifying the code of conduct for collection agents of banks. Money laundering is the process by which criminals attempt to hide and disguise the true origin and ownership of the proceeds of their criminal activities, thereby avoiding prosecution, conviction and confiscation of criminal funds.
It is also linked with crimes such as financing of terrorism, human trafficking, organised crime and tax evasion. Indian financial institutions (FIs) are under increasing scrutiny of local and international regulators for implementation of the AML regime. The survey says that banks are training their staff to reduce money laundering risk.
Colin Lobo, associate director, KPMG, said that increased regulations and recognition by FIs to preserve their reputations make investments in a robust AML system vital.