Customer Assessment Emerges as Regulatory Priority in Asia-Pacific

Implementation of risk-based assessments of customers and a push to better establish ultimate business ownership are emerging as major regulatory compliance trends in the Asia-Pacific region, according to an anti-money laundering (AML) advisor at risk and regulatory technology provider Wolters Kluwer.

"There will likely be a further burst of regulatory change as fintech moves into the mainstream," says Michael Thomas, Shanghai-based senior advisor for anti-money laundering at Wolters Kluwer. Customer assessments will screen for signs of potential money laundering and terrorist financing, as well as compliance with tax reporting and collection.

Firms will need to adopt a multi-track approach that combines adopting technology to manage heightened AML and know-your-customer (KYC) requirements, managing organizational change, especially adopting a company-wide focus on these issues, and the development of relevant talent, according to Thomas.

A global study published in December by the Association of Certified Anti-Money Laundering Specialists found that 70 percent of institutions surveyed had increased AML staffing over the past three years, while most were planning to boost AML investment by double-digit percentages in the next three years.

According to Thomas, the reasons for the increased staffing and investment are rising regulatory requirements and changing regulatory expectations.

The Panama Papers, which shed light on offshore dealings of major political and business figures, as well as the closure of private bank BSI Bank in Singapore due to its links to the 1Malaysia Development Bhd fund in May, have resulted in AML regulations becoming top priority for regulators in the region, Thomas adds.

Legislation concerning AML is "inevitable" in markets where AML rules are relatively underdeveloped, such as the Philippines, according to Thomas. In more established regulatory regimes like Singapore and Australia, regulators are "likely to increase their oversight of wealth management activity and the flow of funds from overseas into assets like real estate," he says.