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#Financial Crime Prevention

South East Asia is about to become borderless

International Compliance Association

ASEAN , border , bribery , economics , security

South East Asia is about to become borderless; someone is keeping tabs on the North Korean leadership apparatus and campaign financing is under the spotlight.

January 2015 sees the establishment of the Association of Southeast Asian Nations (ASEAN) Community
which will attempt to harmonise the security, economics and socio cultural communities of ten nations. Naturally, some parties are concerned about the impact that removing borders will have on the region. What does this mean for financial services?

The reduction of border controls in Asia is likely to lead to an increase in transnational organised crime, experts have warned. The primary objective of organised criminal activity - drug and human trafficking, counterfeiting, environmental crimes - is to make money and it does, in abundance. As organised criminals want to appear legitimate, they try to make their money appear clean and do so by getting it into the financial system. Although direct placement of the proceeds of crime is becoming more difficult as banks become more aware of money laundering typologies and build better defences, gaps in the system may become apparent in ASEAN if the national borders are eliminated.

Cross border crime in South East Asia alone generates close to USD100m and this is a conservative estimate according to specialists from the UN Office on Drugs and Crime.

On a small scale, the border between Thailand and Burma is porous; I’ve seen holes in the fence and gaps where people climb through from one side to the other in plain view of Thai border guards. These areas are used by locals travelling for work or to see family.

Further south, stories are rife of border patrols taking bungs to allow the trafficking of sex workers across the border from Thailand into Malaysia.

On a larger scale, might it be feasible for the proceeds of a bribe or tax evasion paid in one ASEAN nation to be lost in the financial system of an ASEAN neighbour?

North Korean PEP names:

For almost the entire month of October, Kim Jung Un, the North Korean leader was missing from view and the subject of speculation on his whereabouts and status.

Broken ankles due to a fall, gout or imprisonment by his own generals for some re-education were all touted. But due to the limited amount of information published by the Democratic Peoples' Republic of Korea (DPRK), we can only speculate.

North Korea is the subject of sanctions and sits in permanent residence on the FATF’s Non-Cooperative Countries list since it was reopened in February 2010.

The North Korean Leadership Watch blog promises to provide ‘accurate and precise information’ on North Korea’s politically exposed and senior public officials. Starting at the top with the Kim family, the blog lists the Secretariat of the Party Central Committee, changes in the Party Central committee and where possible the names of the most senior people in various departments, including administration and the military. It’s worth reading through this to glean names and an idea of how the DPRK is set up. The real pay off, though comes in the biographies section,  which lists details on more than 100 DPRK PEPs. They are probably on your screening lists already, and the likelihood of them actually having accounts in their own names may be limited, but again, worth adding to your databases.


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