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Lloyds TSB tackles money laundering

Karl Cushing
Lloyds TSB has implemented an enterprise-wide, automated anti-money laundering (AML) system in six months to help it comply with strict new legislation governing banks' efforts to prevent money laundering.

Laws such as the Patriot Act in the US and the Proceeds of Crime Act 2002 in the UK require financial institutions to increase their efforts to combat money laundering. They risk heavy fines or even prison sentences for non-compliance.

Ron Whatford, director of group operations at Lloyds TSB, said preventing money laundering is a top priority for the bank.

The AML system monitors and analyses all the bank's transactions using a process known as adaptive profiling to help staff identify unusual or suspicious transactions.

A spokesman for the British Bankers' Association said the UK is already "quite strict" on money laundering. Last year the National Criminal Intelligence Service received 31,000 suspicious financial reports, 60% of which came from banks, he said.

"You need to have some kind of automated processes - it is the most cost-effective way of meeting the new requirements," said Andrew Clark, head of AML services at PricewaterhouseCoopers. A merged company such as Lloyds TSB would most likely have a mass of legacy systems, creating interoperability questions, he explained. "Having this kind of overview becomes all critical in this situation," he said.

The Lloyds TSB AML system was supplied by IBM and software firm Searchspace, whose product is pre-integrated on the IBM platform.

Daniel Mayo, an analyst at Datamonitor, said although IT projects like this are "mandatory", as opposed to cost-driven, Lloyds TSB could use its new software for other tasks involving information analysis. "There are cost efficiencies to be made in looking at this in a wider context," he said.

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