ounting for funding the movement and purchase of weapons, has to end up somewhere other than under the mattress.Where does it go? Presumably, some of it is laundered through the domestic and international financial system, and this important aspect of the security situation is yet to be analyzed and scrutinized.A June report by the Paris-based Financial Action Task Force, which India recently joined, questions the efficacy of Indian financial institutions in monitoring dubious funds arising from money laundering, terrorist financing and other criminal activities.While the country has comprehensive anti-moneylaundering and anti-terrorist financing laws and procedures on paper, effectiveness is essentially weak. A typical Indian scenario: great concept, lousy delivery.How well are Indian financial institutions prepared to counter illicit transactions? The news is not great.A recent report by KPMG based on surveys of Indian financial institutions reveal weaknesses in the regulatory framework for anti-money laundering. Know Your Customer rules are key as they help in thwarting financial crime and they are an important component of sound risk management. In this area, while legislation is sound and there is seemingly a high level of commitment from senior management, front line implementation by tellers is often poor.On a recent trip to Hyderabad, I spoke to partners at a start-up called Jocata, with centers in New York and Hyderabad. In trying to clean up and make Indian financial institutions anti-moneylaundering and anti-terror financing compliant, they have so far observed that many financial institutions in India do not sufficiently tailor or customize policies and procedures, with many literally cutting and pasting the regulatory guidelines into their procedures!The tools used to evade the taxman and regulator are creative and range from opening multiple bank accounts under different names to buying bank checks against a cash payment to routing through opaque ownership structures.How many of you have had a follow up from your bank verifying your identity and account?The Jocata executives say that many institutions, particularly public sector banks, don’t even have proper procedures in place to re-verify existing customer accounts which would include tracking and updating missing or expired documents and other information to risk-rank customers. In addition, there’s a lack of sufficient training and periodic reviews to counter suspicious or unusual activity.For a country leading the information technology revolution,toms outlet, the relative technological backwardness of the financial industry in India is appalling. Many branches,toms shoes reviews, especially rural and in smaller urban centers, do not have the latest software and there has been imperfect integration of old-fashioned paper ledgers with security software.The failures are attested to by the fact that there has not been a single conviction under the Prevention of Money Laundering Act, which has been in effect since 2005,toms outlet. If you’ve just experienced whiplash given the spate of re Related articles:

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