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Recent AML regulatory developments Asia-wide, key challenges and next steps David Nutman Regional Head of Compliance & Regional MLPO Prudential Corporation.

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Presentation on theme: "Recent AML regulatory developments Asia-wide, key challenges and next steps David Nutman Regional Head of Compliance & Regional MLPO Prudential Corporation."— Presentation transcript:

1 Recent AML regulatory developments Asia-wide, key challenges and next steps David Nutman Regional Head of Compliance & Regional MLPO Prudential Corporation Asia

2 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….

3 3 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. Counter- Terrorism 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

4 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

5 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

6 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


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