Hong Kong regulators are taking the lead and cracking down on compliance. Last week its Securities and Futures Commission revealed inadequate KYC procedures within banks for onboarding. The HKMA is also calling on banks to up the ante on money laundering
checks for tax reporting. Regulatory expectations and standards continue to increase not just in Hong Kong but throughout Asia. So how are banks in the region supposed to keep pace?
Headcount has been the quick fix. Some banks have doubled their compliance staff in Asia. Putting people in place is only part of the solution and is no guarantee of quality of KYC data. There’s a broad range of regulations and standards that need to be
met and many are still in flux.
According to Robert Benyo at UBS, speaking at a recent event in Asia, the main challenge is all of the regional variation. Instead of dealing with one jurisdiction, cross border compliance adds a layer of complexity to any relationship. It can’t just be
a one size fits all. What’s good for Singapore may not work for Hong Kong. Couple this with the fact that local banks are forced to inherit global standards and the burden increases.
The solution? There needs to be a coalescing of standards – a centralised service for connected due diligence processes whether its client onboarding or tax requirements. If a bank is doing business in an emerging market or conducting cross border trading,
there must be a consolidated view of overlapping data points and a gold copy of information. Just doing what works for one jurisdiction isn’t good enough. When the regulators shout the rally cry, the response to comply should be unanimous.