This month, both Singapore and the Philippines have strengthened anti-money laundering (AML) and counter-terrorism financing (CTF). In Singapore, changes to the Terrorism (Suppression of Financing) Act (TSOFA) and the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) increase the penalties for failing to file a Suspicious Transaction Report and improve information sharing in a bid to facilitate investigations. While in the Philippines the adoption of the National Anti-Money Laundering and Countering the Financing of Terrorism Strategy (NACS) paves the way for the government and the private sector to work more closely together in combating financial crime.
Amongst the drivers for stronger regulation across the region is the increasing cross-border nature of financial services, and the risks involved when dealing with countries with less effective regulation. Something Hong Kong’s financial institutions are all too aware of as the region’s financial links with China expand.
The good new for regulated firms in the region reviewing their AML/CTF policies and procedures is the leading position of Asia in the adoption of new technologies that can significantly ease the compliance burden, supported my many governments. In a recent interview with Brink Asia, Oliver Wyman’s Subas Roy points out that:
The Monetary Authority of Singapore (MAS)… has both regulated and invested in several spheres to manage the market and encourage innovation. They have partnered and created sandboxes as well as platforms.
In their November Compliance Bulletin, Hong Kong’s Securities & Exchange Commission acknowledges that while fintech presents great opportunities, the potential risks must also be considered. The Commission aims to support firms navigate this sector with guidance including that recently issued in relation to virtual assets.
And in a bid to manage risks, governments continue to make moves to regulate the crypto sector, with Japan planning legislation, aligned with FATF standards, for crypto wallets.
Modern slavery is another priority issue, not only for governments in Asia, but globally. The UK has partnered with a number of countries plagued by human trafficking, including Vietnam, stating:
Working in partnership with other nations, such as Vietnam where many victims are trafficked from, is absolutely vital in preventing modern slavery from taking place and being able to relentlessly pursue the perpetrators.
While the UK may be taking positives steps to tackle modern slavery, the government’s approach to financial crime continues to be criticised. Danske Bank whistleblower firmly places blame on limited liability partnerships and Scottish liability partnerships which he states have been “abused for years”.
Could this be about to change though? The European Banking Commission’s chief supervisor Daniele Nouy has announced plans for an AML Office which will:
set up and chair ‘an AML Network’ among Joint Supervisory Teams in charge of the banks whose business model leads to a high level of money laundering risks.
With this in mind, it is time for banks to instill a true culture of compliance across their organisations, with particular emphasis on the board, as a survey by AlixPartners highlights gaps in training and awareness of AML initiatives amongst board members.
However, an article on PYMNTS.com questions whether stricter AML laws could be having an unintended negative impact on the practice of correspondent banking, which has fallen by 15.5 percent cumulatively from the beginning of 2011 to the conclusion of 2017.
And finally, in a very literal interpretation of money laundering, Dutch police found 350,000 euros in cash… in a washing machine!
The murder of Saudi journalist, Jamal Khashoggi, has prompted conversations between the UK and the EU on a potential ‘human rights sanctions regime’. France has already sanctioned 18 Saudi citizens, including the imposition of travel bans.
The Iranian sanctions regime continues to evolve with the US Treasury imposing sanctions on an international network accused of supply oil to Syria’s government. A video report from the BBC asks what Iranian citizens think of US sanctions targeting their country. The sanctions may well be having the desired effect as Reuters reports on Iran keeping up its part of the deal.
As mentioned, Asian countries are leading the way in the adoption of disruptive technologies, including artificial intelligence (AI) and process automation. TechRepublic highlights the risks to US businesses in lagging behind. Meanwhile, an article in American Banker asks if US regional banks are spending enough on digital initiatives to compete with the level of spending by larger financial institutions.
Born out of the 2008 financial crash, the UK’s burgeoning regtech sector puts the country in a leading position globally. According to Richard Anderson, product management director at Thomson Reuters:
The crash unleashed a tsunami of legislation and increased scrutiny on businesses in areas such as Know Your Customer, financial terrorism and money laundering. There was a lot of panic about how businesses were going to keep pace with regulation, and their answer was to throw money and bodies at it, which is expensive and slow. However, in the past few years we’ve seen organisations attempting to find more cost-efficient solutions, and technology like AI is now capable of automating a lot of the work.
A quarter of the 250 regtech firms globally are based in the City of London.
With the Danske Bank scandal focusing attention on the need to address corporate structures designed to mask ownership information, our recent blog explores best practice in complying with Ultimate Beneficial Ownership requirements.
encompass customer, First State Super, explains how they benefit from intelligent process automation as part of their business growth strategy. Virginia Zhong, Senior Investment Risk Analyst at First State Super, explains:
By creating a regimen of digital processes and systems we have a strong foundation for growth. encompass is very much part of our platform for growth.
Learn more about how First State Super took advantage of the benefits encompass offers in our case study.
And don’t forget to sign up to our final webinar of the year on Friday 7 December, featuring Chris Bull, Founding Director of Kingsmead Square, who will explore legal design thinking and the urgent need for law firms to redesign client onboarding, including:
Next week, on Thursday 29 November, we’re over in Ireland for the Scottish Irish Finance Data & Techfin roundtable. Bringing together leading Irish and Scottish fintech firms to discuss lessons learned, useful insights and best practice in Blockchain, Distributed Ledger Technology, and Machine Learning.
Get in touch today if you’d like to pre-arrange a meeting with our team to discuss automating your Know Your Customer and due diligence processes.
The world of Know Your Customer (KYC), compliance and financial crime never sleeps, and if your challenges are keeping you up at night let us help. encompass robotically automates information and news discovery for KYC requirements for onboarding, event-driven refresh and remediation.
Driven by your internal policies, our platform automatically constructs corporate ownership structures, discovers beneficial owners, and in minutes screens all relevant entities and persons for regulatory, reputational and financial risk.