Asia’s AML industry in Transition

AML

In a newly released report, “2017 Asia Pacific Vendor Landscape: AML Solutions”, independent research and consulting firm Kapronasia focuses on the anti-money laundering (AML) landscape across Asia.

Trends highlighted in the report include:


  • The struggle of financial institutions in Asia to validate ownership information due to the absence of national-level ownership repositories
  • The need for organizations to fine tune their AML controls to identify terrorist financing
  • The immaturity of technology use at AML operations in Asia
  • Individual financial executives now being held liable for AML compliance
  • The increasing sophistication of AML requirements in China and India
  • The need for the gaming and gambling industry to adopt a risk based approach to AML
  • Financial institutions in the region now considering adopting a utility model for KYC

“AML technology is becoming an essential tool in the overall strategy to fight financial crime. Cybercrime, especially crime related to terrorism, has forced governments to focus on financial transaction processes in order to ensure the safety and legitimacy of the financial services industry,” said Anshuman Jaswal, Director at Kapronasia.

The report goes on to compare and rate leading AML solutions, including LexisNexis Risk Solutions .

Specifically the report calls out Bridger Insight XG a fully integrated compliance solution and platform, which has been named by other analyst firms as Category Leader for watchlist screening and Best of Breed for Know Your Customer (KYC).

The AML industry in Asia has changed over time. In the past, most of the countries in the region were content to meet the regulatory requirements of the leading global markets, such as the U.S. However, in the last decade, a regulatory impetus has arisen to ensure that AML compliance platforms meet the specific local and national requirements across jurisdictions.

Thomas C. Brown, senior vice president, U.S. Commercial Markets and Global Market Development, LexisNexis Risk Solutions, comments: “The pressure on financial institutions has never been greater to ensure they are complying with AML regulations in each jurisdiction they operate. Given this, we are seeing great demand for LexisNexis Risk Solutions Bridger Insight XG platform, which reduces the complexity and boosts the efficiency of KYC processes and the entire compliance department at a bank or corporate.”

The Kapronasia report notes that without this technology firms would struggle to meet their requirements cost efficiently. Large banks employ hundreds, if not thousands of professionals to manage their AML compliance requirements. This figure would be much higher were it not for machine learning and greater commoditization of the underlying technology. A shared database provides an opportunity for banks to flag common threats faced by institutions.

“Firms need the basic capability to screen efficiently any customer or money flow against a range of highly dependable lists that cover the critical aspects of financial exposure,” says Mr. Brown. “A LexisNexis Risk Solutions survey on financial inclusion and financial transparency revealed nearly 9 out of 10 respondents in Hong Kong (87%) agreed they would be willing to collaborate with their peers to streamline client onboarding. In China, our study found 79% agreed they would be willing to collaborate with their peers to streamline onboarding, KYC activity and watchlist processing.”

The Kapronasia report further notes banks will need to move from a previous “check-the-box” approach, to a more dynamic and proactive mindset. In the future, some of the most important regulatory requirements are expected to be around the issue of financial inclusion and financial transparency.

Brown observes: “Going forward, we are of the view that we’ll see increased mechanisms for financial inclusion. We want to drive financial inclusion in the economies in which we operate and in turn, that will help satisfy the global need for financial transparency. It’s going to take industry-wide and even cross-government action to help with that transparency through data sharing.”

David Haynes, LexisNexis Risk Solutions Head of Asia, noted that big data, natural language processing and artificial intelligence are now commonly expected to play a key role in regulations, and meeting regulatory requirements, particularly in areas such as KYC.

“With the use of big data analytics, banks can analyze their trends in compliance, cooperate with other financial institutions which do the same, and then present a market-wide picture of compliance to regulators. This allows for better targeting of system-wide compliance monitoring and surveillance and even inform how they should frame regulation itself,” says Haynes.