Industry experts warn firms to be prepared to combat TBML and adopt water tight standards to deal with risk issues globally.
Accuity, the global provider of risk and compliance, payments and counterparty know your customer (KYC) solutions, presented critical advice to industry professionals on how to prepare for the challenges they are facing with trade-based money laundering (TBML) and to ensure their firms are ‘regulator ready’. With five out of the top ten countries in terms of illicit money outflow being in Asia, TBML is a serious area of concern. Partnering with leading law firm, Simmons and Simmons, Accuity held a joint event in its Singapore office, hosting over eighty trade finance, legal and compliance professionals to identify and debate the best practices in developing effective internal policies to prevent TBML.
The event had an expert panel deliberating on the problems faced by banks and the way forward, comprising industry stalwarts, Mr. Jon Yeo, Head of Compliance, Maybank Singapore, Ms. Yvette Cheak, Advisor, Associations of Banks Singapore (ABS) and a fellow member of the International Compliance Association (ICA), Mr. Jolyon Ellwood Russell, Partner, Simmons and Simmons, Ms. Joanna Pearson, Partner, Simmons and Simmons, Mr. David Pan (CAMS), Associate Director – Business Solutions, Accuity and Mr. Sean Norris, Managing Director – APAC, Accuity.
The interactive panel discussion saw exchange of ideas and best practices from practitioners, around the real issues confronting banks in Asia and the ways to bridge the gap between what regulators want to see and the practical solutions for trade operations. Speaking at the event,
Jon Yeo said, “It is essential there is good, two-way flow of information among the front, mid and back office functions to mitigate the risk of TBML. In order to better address the TBML issue, it is important to break down the silos and work with an integrated approach and processes.”
Yvette Cheak said, “The Singapore regulatory framework, including the MAS Act, notice and guidelines, uniquely positions the APAC region to lead by example. Regulatory enforcement around TBML will increase and firms need to maintain up-to-date policies, keep accurate records, and raise awareness of risks and methods by investing time and money into their staff. The time has come for banks to re-calibrate their compliance systems.”
Jolyon Ellwood Russell said, “TBML is not just used for terrorist financing or drugs anymore. It’s no longer obvious – it’s used as a method to evade tax, avoid customs duty and most importantly in Asia, as a method to circumvent capital controls and capital flight. You can see why this is a focus for governments and regulators, and why it’s important that you’re prepared.”
Sean Norris said, “The geopolitical landscape is changing every day and firms need to put practical solutions in place to tackle the complexities of money laundering, terrorist financing and to focus on dual-use goods screening.”
The 5 best practices from the expert discussion were:
- Regulatory changes occur almost daily and the life-cycle of a trade finance transaction can take months. Institutions need to have a complete view of the entire trade cycle and not just a snapshot. Detailed documentation and a complete audit trail is critical.
- The regulator scrutinises institutions of all sizes with a single lens. Regardless of size, institutions need to have all the due diligence methodologies in place.
- Consistency is key to combat TBML. Banks require a homogeneous way of implementing the risk and compliance policy. A few questions to be asked include: Who is screened? What elements of a trade are screened? How are red flags identified?
- A red flag will require the bank to put on an investigators hat and place context around the transaction. The right triggers need to be created and false positives need to be minimised to reduce cost and increase customer experience.
- Money laundering and terrorist financing are risks associated with trade, and dual-use goods detection was raised as a point of concern for banks, with the need for systems to improve identifying dual-use goods regardless of how the goods are described is a particular pain point. For example – sodium sulphate is not dual use but sodium sulphide is (it is an uncommon pre-cursor to chemical weapons). Most trade operational staff may not have the knowledge to know the difference, but that is where data-enabled screening technology can assist.
Notes to editors
Accuity offers a suite of innovative solutions for payments and compliance professionals, from comprehensive data and software that manage risk and compliance, to flexible tools that optimize payments pathways. With deep expertise and industry-leading data-enabled solutions from the Fircosoft, Bankers Almanac and NRS brands, our portfolio delivers protection for individual and organizational reputations.
Part of RELX Group, one of the world’s leading business information and data providers, Accuity has been delivering solutions to banks and businesses worldwide for 180 years.