Monitoring what goes on inside your bank can do far more than just comply with AML legislative requirements
Wolters Kluwer Financial Services today advised that financial institutions in the Asia region should take a hard look at their Anti-Money Laundering (AML) processes and procedures following the recent huge fines for non-compliance having reached U.S.$ 8.9 billion. The complexity of providing global financial services must not be underestimated and as Chinese banks branch out onto the global stage they also must be alert to the risks of doing international business.
"Sanctions imposed by individual governments or via global bodies such as the United Nations must become a part of a bank's overall Anti-Money Laundering and Terrorist Financing controls," said Michael Thomas, director, North Asia at Wolters Kluwer Financial Services in China. "The new record-high fine is only one of many large fines that the U.S. regulators have levied for money laundering and sanctions breaches, and European regulators are also becoming increasingly aggressive when they discover similar incidents. The reputational as well as financial cost could seriously damage even the largest firms."
The People's Bank of China has been stepping up its own controls around money laundering and terrorist funding with the introduction of new requirements for specific risk assessment of all individual and corporate customers, considering such things as nationality, domicile, types of business transacted, the methods used to transact business (non-face-to-face business is higher risk) and behavioral patterns of doing business over time.
"A firm's AML solution should have the capability to filter against specific sanctions requirements as well as satisfying its intended AML needs. Sanctions may just be country and industry specific, or relate to trading in specific currencies," Thomas added.
Thomas also pointed out that another key aspect that banks must follow is the Know Your Customer controls, through which they can reasonably verify that a customer has earned the money through legitimate means that they may wish to transfer overseas, and can reasonably assess the legitimacy of the reason for the transfer. The AML customer Risk Assessment guidelines now being implemented by the Chinese authorities will go some way towards addressing this issue, but banks need to act now rather than wait for the target review deadline of December 31, 2015."
Wolters Kluwer Financial Services' AML solution is fully capable of both meeting the AML requirements required within China and of managing global sanctions risk. The dynamic nature of risk assessment, as required by the China regulations, will quickly re-categorize a person or entity to reflect changing circumstances. Wolters Kluwer Financial Services can also provide instant updates to sanctions and terrorist lists issued around the world to keep customers fully in line with the latest requirements.
Thomas will give a presentation at our webinar "Anti-Money Laundering - Global issue becomes urgent in Asia" which will take place on Thursday, August 7 at 2:30 p.m. (GMT+8). Drawing on his deep industry knowledge and experience, Thomas will share best practices and emerging trends in AML, including the new requirements for conducing risk assessments on new customers and the Know Your Customer controls. In addition, Wolters Kluwer Financial Services issued a comment piece that further highlights the key aspects that financial firms must pay attention to in order to remain compliant. "Recent Reports on Money Laundering Should Serve as a Wake-up Call to Financial Institutions in Asia" details the global issue and provides guidance on mitigating risk during a time of more stringent regulatory enforcement.