A Christmas wish list for the AML community

Author: Bill Majcher

December-22 2016

InnoXcell speaks to Bill Majcher, AML specialist on the community’s aspirations, realisations and more…

Hi, Bill. Let’s talk a bit about the key achievements of the AML industries this past calendar year…

I don’t see a whole bunch, to be quite honest, but there is some promise on the horizon with some changes where managers and financial institutions are going to have closer scrutiny and accountability following the UK model. That is a step in the right direction. If there’s been one thing that’s achieved, there’s a greater awareness among regulators in HK that they are missing a lot of activity they should be capturing. There is a greater willingness to address AML deficiencies in the marketplace

How much of an impact does the impending FATF review have on AML preparedness in Hong Kong?

There is an absorption with the FATF review coming up, but I don’t think that Hong Kong will fare as well as it’s hoping to for a very simple reason: there are glaring gaps in Hong Kong’s AML regime. There is still no border control or mandatory reporting in currency; this is huge in light of over $1 trillion coming in from our next-door neighbour, China. Now this is either a conscious gap or a stunning lapse; take your pick. Very evident is the abundant use of Hong Kong insurance companies and products facilitating wholesale money laundering from China, and recently, it wasn’t Hong Kong’s authorities that addressed this practice, but China.

How do you see Hong Kong faring in the evaluations?

I think Hong Kong is in danger of becoming a second-tier financial centre because its not conducive to doing business in a timely manner. It’s not an outcomes based system, it’s a tick the box regime. We’re discouraging legitimate business because we’re focused on collecting all this data. But who’s going through it? The JFIU is buried in mountains of data and we have no clue how to process it. There is a lack of innovation, new ideas and knowledge as to current practices in the real world. Consequently, we are implementing a too little, too late AML regime.

We also need to ask ourselves, are the FATF guidelines respected? Overrated? Nothing happens if you’re put on the black list, it seems to be doing little more than paying lip service; a look at Panama since the Mossack Fonseca revelations is proof of this.

Would you say there is a laissez-faire approach when it comes to regulation?

There is a risk-averse culture from a leadership perspective here; doing the right thing is not as important as being politically correct. I think HK has taken a big step backwards. Our approach to de-risking has made it almost impossible to open a corporate account in a reasonable manner; requiring overstretched teams to spend way too much time on the good guys; diluting resources to focus their attention on people that deserve way more of their time.

So who holds the key to changing this?

Bankers; government representatives responsible for financial health and wellbeing policies; policing – not only in Hong Kong, but globally, too. We need to internationalise a focus group in order to look at what is happening globally in terms of business practice and methodology and to see how we can anticipate these developments. The same thought process that created your problems can’t eliminate them.

Just a little bit more...

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