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#Anti Money Laundering

The winds of change have rolled in with the Asian Autumn

International Compliance Association

aml , APAC , bank , money , PEP

Since early October, students in Hong Kong have protested against China’s reneged promise of free and fair elections. This coming from the country who protested last when its citizens lost money en masse due to the misselling of minibonds in 2008. They used to say that HK only protests if the people lose their money. Clearly, this is no longer the case.

Demonstrators are congregating under Occupy Central movement in Hong Kong’s financial centre - the home to massive private banks and numerous boutique finance houses and wealth management companies. they want the monied and the money managers of Hong Kong’s financial and business districts to sit up and take note.

The protests, marred by violent clashes this weekend, are garnering global attention. If Hong Kong succeeds in its bid for elections that are not controlled by business and political interests from Beijing, what developments can we expect in how financial services are supervised?

A PEP with more than one account….

Meanwhile, in the Philippines a large scale corruption case is hitting the headlines. Senator Ramon "Bong" Revilla Jr., his wife, children and siblings held 81 bank accounts which they used to hide the proceeds of corruption, the Philippine prosecutors have alleged in court.

Having a large number of bank accounts, according to an expert witness from the Anti-Money Laundering Council (AMLC) is a sign of a 'money laundering scheme.' While the number of accounts held may be significant in this case, simply having a few bank accounts is not always an indication that the account holder is a money launderer, but incidences of this nature are always worth a closer look. Finding out why a client has several accounts, and then carrying out some link analysis between accounts to verify that their reasons make sense should clear up any suspicions. Of course, if your client is politically exposed person, as Senator Revilla Jr is, there is an even greater urgency to investigate.

Strictly Pacific..

The Asia Pacific Group on Money Laundering (APGML) has issued a statement expressing its concern about Vanuatu, the tiny Pacific island jurisdiction. APGML is concerned that Vanuatu has not criminalised ML/TF adequately, is unable to screen for sanctioned terrorists, does not undertake adequate customer due diligence and has no AML framework for non-banking entities. Vanuatu is a weak link in the APGML’s regional armour, but in terms of the big tax secrecy havens, it is a small player. It did not even rank in Forbes’ 2010 list of the Top Ten Tax Havens.London and Singapore were on the list.

De-risking vs exclusion

The Financial Action Task Force has reacted to warnings that stronger regulation for anti-money laundering and counter-terrorist financing could result in financial exclusion as institutions pull services from jurisdictions and groups deemed not worth the risk. Some on the sector claim that de-risking - as the process is known - would drive the so-called ‘shadow economy’, the use of alternative financial systems which can be both beneficial and nefarious, but are almost certainly unregulated. Now that the banking sector has spent vast resources developing regulatory systems that are meaningful and effective, is there a real fear that the users will turn to unregulated systems simply because they are scrutinised less? Regulators, it appears, are struggling with balancing how to do their job and not stifle innovation.

For Hong Kong, the struggle is a little more pressing. They are balancing their freedom to vote, with Beijing’s desire for control. China may turn out to be a risky partner for Hong Kong, but for the Special Administrative Region, de-risking may not be an option.


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