A Survey by World-Check and BMR Advisors August 2009: Anti-Money Laundering in India

Anti-Money Laundering
in India
A survey by
World-Check and BMR Advisors
August 2009
India AML Survey Report 2009 World-Check | BMR Advisors
Foreword
Executive summary
Detailed survey findings
Regulatory framework
Organisation structure
Operations
AML budget
Survey methodology
Table of contents
4
3.1
3.2
3.3
3.4
India AML Survey Report 2009 World-Check | BMR Advisors
Disclaimer:
The information contained herein is based on responses received from survey participants and
interviewees. It provides
general guidance as on date of preparation and does not express views or expert opinions of World-Check
and / or BMR
Advisors do not take any responsibility or inability for loss arising to any person acting or refraining from
acting as a
result of any material contained in this report by World-Check and / or BMR Advisors. It is
recommended that
professional advice be sought based on the specific facts and circumstances.
India AML Survey Report 2009 World-Check | BMR Advisors 1
1. Foreword
An amount 13 times larger than the country's foreign debt - USD 1500 billion has been alleged to have
been laundered by Indians in Swiss banks* – an issue raised even during the recently concluded
Parliamentary elections. Anti-Money Laundering (AML) has become a serious issue due to the
possibility of such funds being used for terrorist financing, apart from the revenue loss to the government.
The Reserve Bank of India’s (RBI) seriousness in this matter can be gauged from the fact that it
significantly delayed the banking license of and stalled a mutual fund acquisition by a Swiss bank, on its
reluctance to cooperate with Indian
authorities to unravel a trail of funds involving racehorse owners and Saudi arms dealers.
India now has a specific money laundering law in the ‘Prevention of Money Laundering Act, 2002’
(PMLA) and its
intention is to become a full member of the Financial Action Task Force (FATF). This, therefore, is the
right time to
assess the state of AML in India. World-Check and BMR Advisors have conducted this survey among
AML practitioners
in India with the objectives of:
Highlighting major issues and challenges being faced by the AML community;
Gaining an insight into the approach taken by organisations to comply with these regulations;
Assessing organisations’ readiness to meet current (and expected) AML requirements; and
Understanding the priority of AML for senior management and key stakeholders.
We are thankful to the respondents who have participated in this survey, and hope that the findings
summarised would
significantly contribute to the AML debate in the Indian context.
Jay Jhaveri
Head, Asia
World-Check
[email protected]
www.world-check.com
Sarabjeet Singh
Partner, AML Practice Head
BMR Advisors
[email protected]
www.bmradvisors.com
2. Executive summary
This survey is based on interviews and responses to the
questionnaire that was filled in by about 168
respondents in India, working with Public Sector Banks

(PSBs), private sector banks and foreign banks. We
have made a conscious attempt to include a variety of
banks with different sizes and type of operations in
order to obtain a detailed picture and in-depth understanding
of the AML regime in India. The profile of the
respondents is given in the Methodology section (page
13) of this report.
Marked difference in AML operations:
PSBs vs Foreign banks
Investment in skilled manpower, periodic trainings,
strong senior management involvement, adoption of
sophisticated systems and availability of global
knowledge powerhouse are the key characteristics that
propel foreign banks to a different level.
AML regulations can be made more focussed
Unlike relatively mature regulatory countries, Indian
AML regulations do not place stringent compliance
requirements on banks. Indian banks are yet to come
up the curve in compliance with global AML standards
and hence this limits their business expansion in these
economies.
Implementation of AML programme is the biggest
challenge
Along with legacy data sourcing issues, migration of
KYC data from physical account opening forms
to the newly established electronic systems has been an
uphill task for the PSBs. This is, however, in contrast to
the situation faced by the private sector and foreign
banks.
Optimisation of transaction monitoring:
Belief vs Implementation
Better scenario design with statistically validated
thresholds is the need of the hour. It is imperative for
PSBs is to invest in a good transaction monitoring
system, to sift through large amounts of data required to
generate true alerts.
Industry lacks adequate number of skilled and
certified AML professionals
There is near unanimity that availability of a skilled AML
workforce is a big operational challenge. Improper
allocation of training budgets and poaching of skilled
resources add to the agony of banks.

PEP definition revisited by PMLA
With the availability of different lists and in continuation of
the debate regarding who is a Politically Exposed
Persons (PEP), it is imperative for banks to understand
and adhere to the definition of PEP as advised in the
recently issued (July 2009) indicative guidelines by the
Prevention of Money Laundering Act, 2002 (PMLA).
3.1 Regulatory framework
The key regulation remains the PMLA with the
knowledge that all recommendations of the Fiancial
Action Task Force (FATF) will eventually find their way
into it. To that end, banks have started assessing how
many of their procedures or systems would undergo
change if they were to comply with all the FATF
guidelines.
About 64 percent of the respondents indicated that they
are already complying with most of the
recommendations. However, this number climbs to 78
percent for foreign banks operating in India.
Claims of high compliance are somewhat contradicted

by the level of awareness on all the provisions. Of the
respondents complying with the PMLA, only 47 percent
claim a high level of awareness. For those complying
with FATF, the percentage is even lower with the
maximum number (close to half) claiming a medium
level of awareness.
The amended PMLA will address India’s international obligations to the FATF
Intermediaries like money changers, money transfer service providers and international payment
gateways along
with casinos have been brought under the ambit of amended PMLA 2009
It would also check the misuse of promissory notes by Financial Institutional Investors (FIIs), who would
now be
required to furnish all details of their source
The Act would check misuse of ‘proceeds of crime’ be it from sale of banned narcotic substances or
breach of the
Unlawful Activities (Prevention) Act
It empowers the enforcement directorate to search the premises immediately after the police have filed a
report
A majority of senior management respondents believe
that implementation is the biggest challenge in AML.
Whether it is due to legacy data or operational
difficulties, designing and executing an effective
implementation programme remains the biggest
impediment to success.
As we go through middle management and

operational levels, perceptions change. Probably
reflecting their priorities, interpretation and for some
respondents, reporting is the biggest challenge. More
than anything else, this reflects the work that they are
Interpretation Implementation Reporting
Senior mgmt. Middle mgmt. Operational mgmt.
10
20
30
40
50
60
70
80
What is the biggest challenge in complying with the
AML regulations?
What is the level of improvement required in the
following activities to comply with regulations?
Transaction
monitoring
KYC function Training to staff Reporting
10
20
30
40
50
60
70
80
20
40
60
80
100
What is the most effective measure to combat money
laundering?
Public Private Foreign
Staff vigilance Stringent regulations

and applications
Robust AML
technology
involved in. This does diminish the importance of
streamlining reporting. A senior officer from one of the
leading Indian banks mentioned that “filing of Cash
Transaction Reports (CTRs) or Suspicious
Transaction Reports (STRs) is a challenge for banks
which have not implemented a Core Banking Solution
(CBS) in all branches”.
All areas of the AML funtion require an equal focus
according to most banks. In practical terms, this means a
proportional division of budget in training, technology and
operations. However, when the data is split for PSBs, a
clear trend emerges.
Over 65 percent of the respondents from PSBs believe
that there is a significant level of improvement required in
the field of transaction monitoring. This is partly due to
their claims of satisfaction with the available training and
largely due to the limited use of technology and data

remediation difficulties.
All respondents from private banks have reported staff
vigilance to be the most effective method to report
suspicious transactions. Foreign banks are split between
technology and staff vigilance.
A Money Laundering Reporting Officer (MLRO) from a
foreign bank informed us that half of the total
Suspicious Transactions Reports (STRs) have resulted
from staff vigilance and not through alerts generated by
the transaction monitoring systems. To some extent, this
is worrying as many measures to strengthen automated
monitoring may take a slight backseat.
Leading private Indian banks have set up links on their
intranet for any employee to ‘report a suspicion’.
However, in the light of inadequate training, staff
vigilance does not create a robust mechanism to identify
suspicious transactions.
Technology, automation, better designed processes and
effective scenario designing have to be implemented at
PSBs and the private banks.

Comparison with global standards
Requirements PMLA FATF
STR threshold
INR 1 million
Min 10 yrs
No
No
No
No
No
No
Min 5 yrs
Yes
Yes
Yes
Yes
Yes
Yes
No specific
amount
Record keeping duration

Designated non-financial business include real estate agents,
dealers in precious stones and metals, lawyers, notaries and other
independent legal professionals and accountants
Rendering mutual legal assistance to countries
Criminalise money laundering as per the UN Convention against
Transnational Organized Crime, 2000
Designated categories of offence include ‘fraud’
Applicability to businesses and professions other than
designated non financial businesses, that pose a money
laundering or terrorist financing risk
For cross border correspondent banking, in addition to due
diligence measures, financial institutions should gather
sufficient information about a respondent institution, assess
its AML / terrorist financing controls and document the
responsibilities of each institution
3.2 Organisational structure
The training reliability in foreign banks is placed equally
on both internal and external sources. Where 29
percent of the respondents reported that AML trainings
are conducted monthly, another 11 percent have

reported that trainings are conducted on a half-yearly
basis and almost the same number of respondents
have highlighted that the training is provided annually.
Private banks that recruit from other industries, provide
training to the staff at the time of on-boarding; prefer
external trainers over internal resources (reported by
38 percent respondents).
On the whole, the industry lacks adequate number of
skilled AML professionals with only 30 percent certified
AML professionals. With the advent of the stricter AML
regulations and advanced methods of money
laundering, bankers agree that there is a need for
specialised training and certification. However,
certification courses like Certified Anti-Money
Laundering Specialists (CAMS) have received mixed
responses from the banking fraternity, as they feel more
confident about conducting in-house trainings or an
India specific certification programme.
Most of the banks have a dedicated AML team, which
report to the MLRO. However, in some banks, there
exists overlap across compliance, risk management and

AML functions.
The survey reveals that while majority of the personnel
engaged in AML activities in PSBs have strong BFSI
background, only a handful are certified AML
professionals. This triggers the need for frequent (100
percent respondents recommend monthly) in-house AML
trainings to keep them updated with the changing AML
environment.
In the case of foreign banks, 41 percent of the
personnel in the Compliance function are certified AML
professionals relative to 29 percent in PSBs and 18
percent in the private sector banks.
20
40
60
80
100
Does your organisation have a dedicated AML team?
Private Public Foreign
Yes No, it’s shared No dedicated team

What are the general skill sets among AML personnel in
your organisation?
20
40
60
80
100
BFSI
background
Prior work
experience
Compliance
background
Can’t say Certification
What is the frequency of AML training programmes being
held in your organisation?
Yearly Quarterly Monthly During
onboarding
Half yearly Others Can’t say
20
40
60
80
100
3.3 Operations
There is near unanimity amongst banks that availability
of skilled staff is a big operational challenge. Nearly 50
percent of the respondents pointed out the lack of
defined processes in their respective banks.
AML has not reached the level of stability compared to
normal operational processes, where procedures are
strictly codified and the people fully trained to follow
them. This also exhibits lack of rigour in AML
implementation on the part of banks.
There is again a split between PSBs and the other
banks. Infrastructure and technology is the biggest
challenge for PSBs – a recurring theme throughout the

survey.
This reflects inadequate budget allocations and minimal
focus by senior management at the respective PSBs. On
the other hand, changing regulations were least cited by
PSBs as operational challenge.
20
40
60
80
100
Skilled
staff
Changing
regulations
Infrastructure
and
Technology
Others Lack of
defined
process
What are the key operational challenges that your
organisation encounters?
Usage of AML risk model
All senior management respondents reported that they
have a risk-based approach in place. However, 15% of
middle management and 20% of operational
management respondents either did not comment or did
not adopt the risk-based approach.
The responses showcase lack of clarity, inadequate
training and undefined processes - a recurring theme in
this survey. Very few respondents reported that they
followed a truly composite risk-based model that was
statistically validated.
The risk-based approach in many banks falls short of
FATF guidelines. Current models too are not effectively
communicated.
On what parameters does your organisation categorise
the risk level of its customers?
No risk
based
approach
Geographical
location
Industry
type
Customer
Type
Product
type
Can’t say Others
20
40
60
80
100
Banks which have significant overseas footprints or
dealings have been found to be aware of the need for an
external database for screening. Supporting the same,

the survey reveals that 65% of the respondents in foreign
banks place reliance on external databases for the
identification of PEPs/ SPFs.
However, 43 percent respondents from PSBs reported
that they do not have a clear definition of PEPs / SPFs.
46 percent and 47 percent of private and foreign banks,
respectively, reported that they have developed an
in-house definition for PEPs / SPFs.
The availability of different lists and in continuation of
the debate about who is a PEP, it is imperative for
banks to understand and adhere to the definition of PEP
as advised in the recently issued (July 2009) indicative
guidelines by the PMLA.
Where does your organisation derive the definition of
Politically Exposed Persons (PEP)/Senior Public
Figure (SPF) from?
In-house
definition
External
databases
Regulations Unknown
source
Can’t say No clear
definition
As per the recent (July 2009) amendment to PMLA, 2002, “Politically Exposed Persons (PEPs) are
individuals who are or have been entrusted with prominent public functions in a foreign country, example
Heads of
State or of Governments, senior politicians, senior government / judicial / military officials, senior
executives of
state owned corporations, important political party officials etc. PEP norms may also be applied to the
accounts of
the family members or close relatives”.
Definition invites refinement:
What is the extent to which low ranking
officials and public place holders can be
included?
Does ‘political’ stand more for politicians
than government officials?
What constitutes family and / or, close
associations?
Timeframe for review of PEP status?
Addressing the compliance challenge:
Adherence to an ever evolving definition of
PEP
Robust name and PEP-related risk factor
matching mechanisms
Routine client and transactional filtering
Access to authoritative global PEP
databases
Electronically verifiable proof of due
diligence
10
20
30
40
50
60
70
80
How does the operational management rate primary
screening databases ?
Comprehensiveness of the
information
Training & Support
User friendliness
Meaningful actionable information
Adequacy of secondary identifiers
Excellent Good Satisfactory Poor N/A
About 60 percent of operational management
respondents across all banks (that are using an external
database for screening) have rated the usage of database
as excellent or good on all parameters, while 27 percent
cited lack of training and support as the primary reason
for satisfactory / poor ratings.
Remediation
An important aspect of KYC compliance relates to the fact
that the customer profile is never constant and regulators
issue guidelines that increase the requirements of KYC
information.
About 53 percent of the respondents reported that they
have updated AML-related client documents residing in
physical and electronic forms.
The KYC remediation pain is much stronger for PSBs
considering the volume of account information in paper

format that is scattered across the country. All banks
reported that the challenge is to make customers respond
to the information requests over telephone calls, e-mails
and / or, any other contact channel,established to obtain
the missing KYC information. The KYC process for old
customers is not fully in control of the banks.Some
bankers have also suggested that there is a need for a
legislation which should mandate customers to provide
requisite data to banks. They also point out that “unless it
becomes an industry wide practice, it will be a big
challenge to ask the customer to provide all the details
necessary for risk profiling”.
Periodic updating of transaction monitoring and training
manuals is yet to become an established industry
practice. This can be closely correlated to the relative lack
of importance given to defined processes.
Transaction monitoring
The key challenge in monitoring is minimising false
positives. Even banks with sophisticated monitoring
systems are struggling with the volume of alerts. Many
banks confidentially admit to a big number of alerts just

being dropped without investigation for lack of resources.
Banks need to leverage technology effectively by
designing robust scenarios and statistically validating the
thresholds, based on peer grouping of customers.
How frequently are transactions monitored in your
organisation for identification of suspicious activities/ STRs?
Monthly Can’t say Others Quarterly Real time
monitoring
Daily
0 20 40 60 80 100
10
20
30
40
50
60
Most organisations have reported that STRs have shown
an increasing trend during the past three years. However,

a significant 40 percent of senior management and about
one-third of middle management respondents were not
sure about the STR trend of their organisation. One
possible reason for this lack of awareness could be the
confidential nature of STRs.
On the other hand, it contradicts the high expectations of
staff vigilance that banks have confidently expressed - a
theme discussed in a previous section of the report. The
FIU-IND reported that 3.9 mn Cash Transaction Reports
(CTRs) were filed in 2007-08 as compared to 2.14 mn in
2006-07 – “increase of more than 85 percent and
approximately, 1,916 STRs were reported in 2007-08,
which is twice the number of STRs reported in the
preceding year”.
Technology
A wide range of technology options are available to
banks depending on the type of bank and the
sophistication of its AML processes. With a supposedly
weak state of infrastructure and technology, 71 percent
respondents from PSBs stated that they have procured
a ready to use AML software and accordingly, their

biggest challenge is integration (57 percent) of the
software with existing databases.
No change Significantly
increased
Increased Significantly
decreased
Can’t say Decreased
Can’t say Done at
HO
Ready-to-use
software
Developed
in-house
None Others Development by
third-party
10
20
30
40
50
60
70
80
How has your organisations’ AML/ KYC technology platform been developed?
Many respondents also feel that there is a lot of
subjectivity involved in reporting a suspicious
transaction. Most bankers have expressed the hope that
the AML teams will learn this through experience and
periodic feedback from the Financial Intelligence
Unit-India (FIU-IND).
Over the past three years, what has been the trend with
regard to Suspicious Activity Reports (SARs) &
Suspicious Transaction Reports (STRs) that your
organisation has reported?
10
20
30
40
50
Private banks with their considerably enhanced
technology platforms prefer a customised in-house
approach (50 percent). Foreign banks understandably
(49 percent) obtained their AML solution from their head
office as part of the global implementation.
Correspondent and shell banks
About 89 percent respondents from private and foreign
banks as compared to 43 percent from PSBs, reported that
they are not conducting transactions with shell banks.
Approximately 29 percent respondents from PSBs reported
that no AML risk assessment was performed on its financial
institution customers.
Third party service providers
RBI guidelines for PSBs restrict outsourcing of KYCrelated
processes – which is interpreted by most of the
PSBs that no part of KYC can be outsourced to a third
party. Also, PSBs overall reported a very low reliance on
service providers on all aspects. As a result, 67 percent
respondents stated they had engaged no external

service provider.
Third party service providers are most sought after by
the private banks for ‘technology assistance’ – as also
supported by 100 percent of respondents.
In other areas of outsourcing, access to confidential
information and lack of relevant skills are cited by private
and foreign banks as the constraints against hiring
external service providers.
In which areas are services being currently provided by third parties?
Transaction
monitoring
Perform KYC
processes
Process
documentation
Regulatory
guidance
Provide
AML training
None Technology
assistance
20
40
60
80
100
3.4 AML budget
What has been the trend in the AML cost of compliance
over the past three years?
Increased significantly Insignificant variation
AML spend has witnessed a significant increase in the
past three years accross all banks. While all the
respondents from private banks believe that there has
been a significant increase in the AML spends, 60
percent to 70 percent of the respondents from public and
foreign banks respectively also concur with this.
Approximately 75 percent of the respondents from
foreign banks are not sure about the adequacy of the
AML budget, whereas, in case of PSBs and private

banks, the opinion is almost equally divided on the
adequacy of the AML budget.
Is the current AML budget adequate?
No Yes Can’t say
10
20
30
40
50
60
70
80
Private Public Foreign
20
40
60
80
100
Organisations are spending millions each year on their
AML programmes. However, many senior executives
have become frustrated.
AML future spend
Majority of the respondents visualise that their
investment in AML compliance will increase over the
coming years.
PSBs have specifically identified technology as the key
area to increase their future AML spending.
Private banks are likely to spend equally on people and
technology, while foreign banks have identified due
diligence / screening tools as the most significant area,
probably in anticipation of PEP screening norms being
implemented.
Almost all respondents feel that spending on external
service providers is going to be at a minimum and most
work will be done by in-house resources.
How do you see the allocation of the total AML
spend going forward in the following areas?
Personnel Technology Due Diligence /
screening tools
20
40
60
80
100
4. Survey methodology
The survey was conducted over a period of two months
spanning across 2008-09. The survey comprised both
quantitative and qualitative elements:
A quantitative online questionnaire;
In-depth qualitative interviews with senior AML
professionals; and
A round table debate
Over 150 computer-assisted interviews were conducted,
primarily with professionals working either in the
Compliance department or an independent AML
department. The participants completed the entire
web-based questionnaire of 42 multiple-choice

questions.
Acknowledgements
World-Check and BMR Advisors would like to express their gratitude to the following individuals:
S Ramachandran
N Jeevaga
Shibu Abraham
Rajeev Nair
Raj Kumar Tripathi
Sanjeeva Murthy B K
Milind Wagale
The Survey covers respondents from all levels of
management, with middle management having the
maximum number of respondents i.e. 44 percent of
these 15 percent are involved in the AML policy
formulation and 20 percent own and manage the AML
functions within their respective organisations.
The total coverage of the participating banks (including
PSBs, private and foreign players) in terms of capital
and reserves, advances and workforce vis-à-vis the
entire Indian banking sector to comprised of 56 percent,
44 percent and 42 percent respectively.

Legal & Regulatory
Audit
Risk
Compliance
An independent AML
department
Public sector
Private sector
Foreign bank
* Source: RBI Data
0 10 20 30 40 50 60
0 10 20 30 40 50 60 70 80
0 10 20 30 40 50 60
Advances
Workforces
Capital and reserves
Dr. Meera Aranha
Vikas Tandon
Neeta Rege
Manoj Nadkarni
Swati Matapurkar
B L Gupta
About World-Check
About BMR Advisors
World-Check is the leading global provider of highly structured risk intelligence to banks, institutional
lenders, lawyers,
accounting firms and other regulated financial services providers. Founded in 2000 by David Leppan, it
provides a
comprehensive solution for meeting organisations’ regulatory compliance requirements.
More than 3000 institutions, including 49 of the world’s 50 largest banks, rely on this database of known
heightened-risk
individuals and entities to effectively screen their clients, transactions and employees for potential risk
relating to money
laundering, terrorist financing and over a dozen other types of risk. Significantly, it is also the risk
intelligence solution of
choice for more than 200 government and law enforcement agencies around the world.
World-Check's proprietary database and tools have direct uses in financial compliance, Anti-Money
Laundering (AML),
Know Your Customer (KYC), Politically Exposed Person (PEP) screening, Enhanced Due Diligence
(EDD), fraud
prevention, government intelligence and enforcement, and other identity authentication, background
screening and
risk-prevention practices.
BMR Advisors is a professional services organisation offering a range of Tax, Risk, M&A Advisory and
Managed Services
for businesses of all sizes, at local and international levels. Founded by former Arthur Andersen partners,
we are based
out of India with local market offices in strategic locations, close to our clients – including New York,
London, Singapore
and the Middle East.

Most of our clients are Fortune Global 500 corporations and we have executed assignments in more than
40 countries. A
number of our projects have involved implementation in more than 20 countries in a single roll-out.
BMR offers a wide range of risk, compliance and process consulting services – including offerings
relating to Sarbanes-
Oxley compliance; internal audit and IT audit – and has developed a global AML capability to help
organisations deal with
a wide range of critical compliance and strategic issues. These services are designed first to ensure that
immediate risks
are mitigated – then to enable the client to reap the considerable benefits of a long-term, tightly integrated
AML strategy.
Specific AML services include process design and implementation, risk assessments, process migration,
change
management, and ongoing KYC / AML co-sourcing.
www.bmradvisors.com
www.world-check.com
NEW DELHI
MUMBAI
BANGALORE
CHENNAI
LONDON
NEW YORK
SANTA CLARA
SINGAPORE
BAHRAIN

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Anti-Money Laundering

World-Check and BMR Advisors

India AML Survey Report 2009 World-Check | BMR Advisors

Detailed survey findings

India AML Survey Report 2009 World-Check | BMR Advisors

professional advice be sought based on the specific facts and circumstances.

India AML Survey Report 2009 World-Check | BMR Advisors 1

significantly contribute to the AML debate in the Indian context.

Partner, AML Practice Head

India AML Survey Report 2009 World-Check | BMR Advisors 2

This survey is based on interviews and responses to the

questionnaire that was filled in by about 168

respondents in India, working with Public Sector Banks

have made a conscious attempt to include a variety of

banks with different sizes and type of operations in

order to obtain a detailed picture and in-depth understanding

of the AML regime in India. The profile of the

respondents is given in the Methodology section (page

13) of this report.

Marked difference in AML operations:

PSBs vs Foreign banks

Investment in skilled manpower, periodic trainings,

strong senior management involvement, adoption of

sophisticated systems and availability of global

knowledge powerhouse are the key characteristics that

propel foreign banks to a different level.

AML regulations can be made more focussed

Unlike relatively mature regulatory countries, Indian

AML regulations do not place stringent compliance

requirements on banks. Indian banks are yet to come

up the curve in compliance with global AML standards

and hence this limits their business expansion in these

Along with legacy data sourcing issues, migration of

KYC data from physical account opening forms

to the newly established electronic systems has been an

uphill task for the PSBs. This is, however, in contrast to

the situation faced by the private sector and foreign

Optimisation of transaction monitoring:

Better scenario design with statistically validated

thresholds is the need of the hour. It is imperative for

PSBs is to invest in a good transaction monitoring

system, to sift through large amounts of data required to

generate true alerts.

Industry lacks adequate number of skilled and

certified AML professionals

There is near unanimity that availability of a skilled AML

workforce is a big operational challenge. Improper

allocation of training budgets and poaching of skilled

resources add to the agony of banks.

With the availability of different lists and in continuation of

the debate regarding who is a Politically Exposed

Persons (PEP), it is imperative for banks to understand

and adhere to the definition of PEP as advised in the

recently issued (July 2009) indicative guidelines by the

Prevention of Money Laundering Act, 2002 (PMLA).

India AML Survey Report 2009 World-Check | BMR Advisors 3

3.1 Regulatory framework

The key regulation remains the PMLA with the