Money Laundering In The Crosshairs In Asia

12. June 2018.








Change across the regulatory compliance landscape is de rigueur, and global in scope. Crime, too, is global in scope, as fraudsters seek to perfect new end runs around efforts to staunch money laundering and other nefarious acts.

So it is that in Asia, a finance organization is seeking to boost the regulatory embrace of new technologies that are geared toward fending off money laundering efforts. In one of the latest salvos, know your customer, or KYC, efforts are being championed by the Asia Securities Industry and Financial Markets Association (ASIFMA). According to that financial industry organization, KYC initiatives would help companies reduce costs. Some of those offerings from FinTech firms, such as facial recognition technology, might offer “great hope” for the industry, as noted by Mark Austen, chief executive of that association.

In an example of just how expensive money laundering can be, consider the case where the Commonwealth Bank of Australia (CBA) agreed to a record fine of 700 million Australian dollars, the largest penalty ever in the country’s history and double the amount the CBA had estimated it would have to pay. In this case, suspicious transactions had not been reported, and the fine was tied to transactions that funneled funds from sales of drugs and firearms.

Also in Australia, and apropos to small business lending, Prospa delayed issuing additional shares on the country’s stock exchange, in part due to pressure from financial services regulators in that country.

Closer to home, in the U.S., community banks hailed some changes to the Dodd-Frank regulations, particularly in regard to how small to medium banks are treated. The new legislation passed by Congress, known as the Economic Growth, Regulatory Relief and Consumer Protection Act, relaxes some restrictions, namely by boosting the threshold of “too big to fail” from $50 billion to as much as $250 billion. There’s also the exemption of some loan originators from disclosure requires, as had been mandated by the Home Mortgage Disclosure Act.

In reference to smaller-scale lending, the Comptroller of the Currency, Joseph Otting, has said that banks operating on a national scale, as well as federal savings and loan outfits, should make small dollar installment loans. The company has been criticized for high interest rates, which have been clocked in at around 41 percent. At the same time, regulators are seeking to introduce an industry code within the next month that will mandate the companies disclose interest rates, with an eye on transparency, so borrowers can then compare those rates.

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