AML/CFT Framework, as one of the critical safeguards for money laundering and terrorist financing (ML/TF) risk, has been under regulatory scrutiny both regionally and globally. Most recently, the Hong Kong Securities and Futures Commission (SFC) has sharpened its focus on senior management accountability, where the senior management of Licensed Corporations (LCs) and Associated Entities (AEs) have the primary responsibility to ensure that the firm maintains appropriate standards of conduct and adheres to proper procedures. This includes active management oversight and adequate internal controls to ensure proper implementation of Anti-Money Laundering and Counter Financing Terrorism (AML/CFT) systems which comply with all applicable legal and regulatory obligations and manage ML/TF risks.
The SFC issued a circular1 in December 2020 on the key observations identified from the thematic and routine inspections on AML/CFT practices. This recent in-depth review of AML/CFT policies, procedures, and controls (Framework) of LCs and AEs has highlighted five broad areas of weaknesses.
In addition, the Hong Kong Monetary Authority (HKMA) published the 2020 Year-end Review and Priorities for 20212 for banks to adopt in 2021. There’s also increased focus on data and technology from the regulators on AML/CFT RegTech solutions for banks to engage with and adopt to tackle AML/ CFT issues3 .
With the increased regulatory scrutiny and enforcement actions taken by SFC in 2020 against financial institutions (FIs) and individuals on AML/CFT deficiencies and breaches, it underscores the urgency for FIs to identify and rectify deficiencies through the different avenues such as RegTech solutions.
1 SFC. Circular to Licensed Corporations and Associated Entities — Anti-Money Laundering / Counter-Financing of Terrorism (AML/CFT) Findings from inspections of AML/ CFT controls and compliance practices. 1 December 2020.
2 HKMA. 2020 Year-end Review and Priorities for 2021. 4 February 2021
3 HKMA. AML/CFT Regtech: Case Studies and Insights. January 2021.
The key areas of weaknesses as observed in the industry include:
Synpulse deploys a robust review framework to address various facets of AML/CFT requirements and risk such as gap assessment, control recommendations, and target operating model implementation. Key highlights of our offerings include:
Synpulse helped shape the entire value chain, from identifying gaps to formulating controls and implementing solutions to ensure regulatory compliance.
Synpulse has been at the forefront of transformation topics, engaging leading private banks and financial institutions to deliver both compliant and commercially viable control frameworks in response to disruptive changes. Our expertise in regulatory compliance and risk topic has a proven track for technology-driven business processes re-engineering and target operating model implementation. Alongside supporting our clients in addressing their immediate challenges, Synpulse is committed to bringing transformational solutions to the industry, whether developed in-house or in collaboration with our RegTech partners.
Having worked with eight of the ten largest financial institutions in Asia over the past ten years on an array of successful projects in Hong Kong and Singapore, we understand the most pressing regulatory and compliance challenges this region faces based on our proven methodologies.
We would be most pleased to share industry best practices and provide you with further information on how this risk topics may impact your organisation. Reach out now to: Prasanna Venkatesan (Partner) at email@example.com, Gregory Achache (Associate Partner) at firstname.lastname@example.org and Parsa Khoshdel (Director) at parsa.khoshdel@ synpulse.com