In recent years, organisations in many parts of the world have been pouring funds and resources into headcount and technology to fulfil ever more stringent global and local standards on anti-money laundering (AML). Organisations in Asia in particular are responding to the general pivot towards more proactive local regulatory scrutiny of AML and financial crime controls. The FATF Mutual Evaluation, of which includes the on-site inspection which was recently completed in Hong Kong, also guided jurisdictions to identify their weaknesses and move towards to international standards. While these standards and reviews help shape organisations’ frameworks to prevent and detect fraud and economic crime, criminals continue to pose threats against organisations with new creative ways of committing illegal activities and cleaning their dirty money.
According to the Hong Kong Money Laundering and Terrorist Financing (ML / TF) Risk Assessment Report (‘the Report’) issued recently by the HKSAR Government, nearly 80% of money laundering cases were associated with fraud and forgery during the years 2011 to 2015. A high exposure to dealing with fraud-related proceeds comes as no surprise, as Hong Kong handles substantial cross-border payments and settlements on a day-to-day basis. Coupled with a high degree of free trade and its financial secrecy provisions, this environment has attracted domestic and international offenders to abuse the banking system, posing high money laundering risk to the banking sector in Hong Kong.
In the face of the battle against money launderers, what can be done to turn this battle around? What can be done to better manage money laundering risk? Here are three questions organisations should ask themselves, and why.