Alvarez & Marsal examines anti-money laundering compliance in Asia

27 July 2018 3 min. read

In the latest issue of Alvarez & Marsal’s disputes and investigations insights series Raising the Bar, the management and consulting firm’s director of anti-money laundering and counter terrorism finance services for Asia, Shannon Argetsinger, shares his views on the complex compliance challenges facing organisations in the region.

Some rough figures from last year courtesy of the United Nations Office on Drugs and Crime – via governance recruitment specialists Barclay Simpson: money laundering transactions total somewhere between $1 trillion and $2 trillion each year. Authorities seize less than one percent of the illicit transaction streams.

Meanwhile, legal research firm LexisNexis estimates that banks in Hong Kong, Singapore, Malaysia, Thailand and China outlay $1.5 billion annually on anti-money laundering compliance, with 28 percent citing regulatory necessity as the primary motivation, and over half stating that compliance obligations were negatively affecting productivity.

Regularly described as a maze or a minefield, and noted as a top-ten risk facing businesses in the region last year, the evolving anti-money laundering and counter terrorism finance (AML/CTF) legislation landscape in the Asia Pacific can render compliance a complex proposition. Hong Kong, for example, introduced sweeping new compliance regulations earlier this year, extending the burden to a broader range of businesses.

Alvarez & Marsal examines anti-money laundering compliance in Asia

Against this backdrop, Shannon Argetsinger, the Hong Kong-based director of management consultancy Alvarez & Marsal’s AML/CTF services practice for Asia – and a 20-year veteran with the US Drug Enforcement Agency (DEA) – has in the latest edition of the firm’s disputes and investigations insights series Raising the Bar written on the most compelling challenges faced by organisations in Asia as to AML/CTF compliance.

And the take home message is clear; human capital is key. According to Argetsinger: “Many KYC and AML/CTF compliance control protocols spend a great deal of time, resources and money identifying technology systems that will dramatically aid AML/CTF compliance programme efficiency and effectiveness. However, AML/CTF compliance programmes are only as good as the human capital employed/trained to utilise them.”

Argetsinger altogether highlights four primary points; interview skills and regular training are critically important; understanding and ensuring the proper customer risk-ranking approach; a governance framework is the roadmap for success, and, ultimately; it’s all about the people - creating an AML/CTF compliance strategy that emphasises human capital and talent acquisition.

On the latter point, Argetsinger writes; “Identifying and hiring talent is sometimes the easy part, while developing and retaining talent can sometimes be even more complicated within a competitive marketplace that hungers for upwardly mobile, young talent. Make no mistake, human capital is the motor behind successful AML/CTF compliance programmes.”

He concludes with some advice; “One recommendation is that employers look to invest in human capital and hire with the intention of developing and promoting from within instead of looking outside. Again, in Asia, which is an ultra-competitive marketplace, investing in human capital isn’t an easy process, and it requires forward-thinking leadership to promote this concept to foster a competent compliance work force.”