From The Daily Star

While it may be the most common given name in the world, the global banking system seemingly can’t cope with Mohammad and its various different spellings.

When it comes to false positives – where a person or transaction is incorrectly flagged for contravening sanctions – the total at Middle Eastern banks is around twice that of many international lenders because of the high use of names like this, said John Garrett, chief compliance officer at National Bank of Abu Dhabi.

Rectifying these mistakes costs banks and their customers both time and money and highlights the rapidly increasing compliance costs which lenders in the Middle East and Africa must deal with.

Compliance teams face an increasing array of rules, both due to failings exposed by the financial crisis and as banks work with more partners around the world than ever before.

JP Morgan Chase was due to spend an extra $1 billion on controls this year and had added 4,000 compliance staff since 2012, CEO Jamie Dimon said back in September.

Such figures are far beyond anything banks in Africa and the Middle East can apply themselves.

Bank of Sharjah, an Abu Dhabi-listed lender with a market value of $1.01 billion, is more than doubling its compliance team in the next 12 months – to 10 people from four currently – its chief executive, Varouj Nerguizian, said. It is also spending millions of dollars on new software, he added.

Converging factors should be proving a boon for Middle Eastern and African banks.

More trade involves emerging markets, providing more business opportunities – such south-south trade is forecast by Standard Chartered to represent 40 percent of global trade by 2030. And international banks are pulling out of servicing some markets as the cost of ensuring compliance is too high.

Barclays’ decision in June to stop dealing with remittances to Somalia, the country’s biggest foreign currency stream, left those who used this service seeking other avenues.

But Western lenders now also avoid doing business with some Middle East and African banks because such institutions cannot meet compliance standards demanded outside their local markets.

Written by David French/Read more at The Daily Star