David Nutman
Regional Head of Compliance & Regional MLPO
Prudential Corporation Asia
Recent AML regulatory
developments Asia-wide, key
challenges and next steps
Managing the 3 letter world in which we live
Insurers in Asia
 AIA, ING, AXA, ACE, RSA (even Pru)……………
Even the Asian banks
 BOC, CCB, DBS, BEA, UOB, SCB, ANZ, UBS …….……………
The Asia financial regulators don’t want to miss out!!
 OCI, FSA, FSS, SFC, OIC, MAS, BNM, MoF, FSC, SEC………………
Money Laundering also gets in on the act
 AML, CFT, CDD, KYC, STR, FIU, APG……………………
No disrespect meant to HSBC or the HKMA who nearly made it !!!!
Anyway keeping on the theme LMS and apologies for using abbreviations….
Recent regulatory developments
Internationally
 FATF proposals to upgrade their 40+9 recommendations to bring up-to-date and
make relevant for the new world. (October 2010)
 Third EU Directive on ML, IAIS Guidelines still being implemented
Asia (largely in response to various evaluations by FATF and APG) - examples
 Hong Kong – draft bill to tighten AML laws including random border checks, bringing
other industry sectors into regulatory scope and improving record retention. Recent
enhancements to CDD requirements.
 Japan – strengthening CDD measures
 Taiwan – multiple amendments made to Money Laundering Control Act. CounterTerrorism Action Law still in proposal stage.
 India – updated STR legislation beyond financial trigger only
 Indonesia – upgraded their KYC requirements for non-banks and revised AML Law to
allow KPK (Corruption Eradication Commission) to investigate cases of ML.
 Korea – regulatory lowering of threshold to report cash transactions to FIU
3
Key challenges
 At least 9 of the 31 worldwide jurisdictions deemed to have strategic
AML/CFT deficiencies by FATF are in Asia – Prudential like many MNCs
have operations in some (PHP/Indo/THL/VN).
 Emerging markets have cash-based businesses & economy, corruption
remains a concern.
 AML remains largely invisible politically - not an election topic!!!
 Co-operation internationally still needs to develop further – crime is
global
 The law remains weak in some areas particularly regarding CTF
 Sanctions adherence seen to be the biggest burden (Logica survey in
9/2010) – managing OFAC and the extra-territorial reach of US (and now
UK) legislation
 UK FSA fine on RBS Group in August 2010 for failing to have adequate
systems and controls in place to prevent breaches of UK financial
sanctions. (watershed?)
 New Anti Bribery & Corruption Act in UK becomes law in 2011
Asian Cultural challenges
 Unwillingness to disclose information (banking, professional and
personal secrecy).
 Cross-border issues – e.g. mainland Chinese cash into Hong
Kong, Burmese nationals living in Singapore.
 Multi-jurisdictional crime with proceeds of ML often quickly &
easily transferred to another territory.
 Illegal gambling now a prime source of dirty money alongside the
usual suspects (vice, drugs, counterfeiting, financial crime etc.)
 Use of alternative remittance systems (ARS)
 Charitable connections and indigenous terrorist groups
 Low taxation environment can attract the dirty dollar
Next steps
 Unquestionably further reform at a country level (FATF lead? –
some jurisdictions need to complete implementation of action
plans within timeframes proposed)
 Training and education for all (e-learning platforms for front-line
teams and internationally accredited AML programmes for
functional staff)
 Automation for sanctions checking (protecting at the gate) and
increased use of sophisticated tools to flag & track transactions
 Improved industry engagement with local FIUs
 Globalisation – crime has no borders