The survey, reported by the Indo-Asian News Service (IANS), found that 76 per cent of the 2,000-plus institutions questioned said they would increase spending on AML compliance over the next three years.
KPMG said that although 70 per cent of financial sector organisations said they have an effective system in place for monitoring suspicious transactions, it remains one of the top priorities for further investment, along with the introduction of automated AML solutions.
Another key area will be adopting AML policies based on international best practices, the company noted.
The main reasons for increasing investment in AML compliance were India's "escalating global exposure" - which is increasing the risk of money laundering - and the potentially destabilizing economic effect of illegal activities such as terrorist financing, the IANS stated.
KPMG concluded that while India's banks and financial institutions have made substantial advances in AML compliance, there is still scope for "significant investment and improvement".