When I look back at the frenzied events of the first few months of this year – China’s economic woes, the global bank share price run, oil price collapse, potential Brexit, the incredible fintech promise and threat – it’s clear turbulence and chaos have become the new normal in the financial industry.
One of the few things remaining consistent in 2016 has been regulation: MiFID II, Know Your Customer (KYC) and due diligence requirements all remain critical and established components of the financial industry.
Last week I headed to Singapore and returned to a region I have become very well acquainted with over the years. Conversations about KYC continue to dominate regulatory circles in Asia, particularly in Hong Kong and Beijing.
A one-size-fits-all approach – like Europe’s Money Laundering Directives – wouldn’t necessarily suit the nuances of the Hong Kong financial industry, but the Securities and Futures Commission has stated it is prepared to adapt its KYC regulation.
The regulators are poised to shift; the financial industry needs to mirror their dynamism.
Hundreds of employees at Asia-Pacific financial institutions were asked about their customer onboarding process in a groundbreaking global compliance survey. A staggering amount said the time taken to onboard new clients rose by 20 percent last year. Firms are spending an average of US$51 million maintaining compliance with KYC regulation and Counterparty Due Diligence requirements.
Thomson Reuters Org ID has now been mitigating these challenges of tightening regulation in the Asia region for two years – in places ranging from Hong Kong and China, to Cambodia and the Philippines. In that time we’ve processed more than 18,000 full KYC profiles in over 140 jurisdictions, including 4,000 KYC profiles in Asia.
Some of the 18,000 KYC profiles are investment advisers, and we hold KYC data on 104,000 funds. When you look into this further, 50,000 of those funds are from Asia – 33,000 from ASEAN countries. These are staggering numbers and we have been leveraging our Penang centre, which has been running for some 10 years, to do much of the work.
Companies must be able to demonstrate they take their regulatory responsibilities seriously – to themselves and to their customers. If they are able to rely on familiar KYC services in their region, they can be more time- and cost-efficient. This means they can better protect their reputation and financial interests, and the assets of their clients.
Only when customers feel the industry is truly accountable again, will it regain the trust it once had.