Alvarez & Marsal examines anti-money laundering compliance in Asia

27 July 2018

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.”

IPO capital market shift to China slower than expected against US growth

08 April 2019

While the Chinese market is set to become increasingly popular for initial public offerings, new analysis from PwC shows that growth has been slower than expected with the US continuing to dominate.

The financial crisis saw financial markets come close to a complete collapse, with a credit crunch taking hold that derailed much of the coming years in terms of economic growth. The period following the crisis saw IPOs take a backburner. However, as company values increased, a relative boom in exits took place during the middle of the decade, which included a large number of companies going public.

Now, the coming decade is likely to see rapid growth in the developing world – bringing increased interest in the regions’ share-markets for new listings. Looking into the current and future landscape of the global capital markets, PwC’s latest ‘Capital Markets in 2030’ report takes in the views of 370 executives working at some of the world’s largest organisations and examines market developments since 2011.

Ten largest exchanges by market capitalisation for year 2018


The previous survey suggested that emerging market exchanges would rapidly outperform, and thereby displace, developed market exchanges. This prediction however has not come to pass. The further prediction that Chinese markets will be larger than US markets by market capitalisation by 2030 also now looks unlikely with developed market exchanges continuing to grow.

By-and-large, the world’s largest exchanges, the NYSE and NASDAQ, saw significant growth over the years since 2011. The NYSE nearly doubled in size, while the NASDAQ more than doubled. Meanwhile, emerging market exchanges have been relatively slow to grow, with Shanghai up around 50 percent of its 2011 market capitalisation and Hong Kong growing at a similar rate.

When comparing growth, the combined markets of the US – at $30.4 trillion – are now three times the size of their Chinese counterparts on a market capitalisation basis, up from 2.7 times greater in 2011. In terms of the value raised through IPOs on the respective markets since then, the US remains the leading contender, with almost half a trillion raised, while major Chinese markets saw around $300 billion raised.

Projected major regions for IPO issuers by 2030


The respondents were asked to predict which country would see the highest level of capital raising in 2030. China took the number one spot, attracting 55 percent of responses, followed by India at 45 percent and the US at 41 percent. This is well below the previous survey, where 80 percent said China would be the top issuer by 2025, with the downgrade in expectation reflecting the political and economic constraints of China and India.

With Singapore (12%), Indonesia (8%) and even Thailand (1%) attracting attention – as well as the ongoing presence of Japan and South Korea, the relative diminution of China since 2011 could also reflect increasing interest in the broader region, the report citing HKEX’s Head of Streagy James Fok; “We need to look at the development of the economies around Asia. There are significant opportunities for companies in the Southeast Asian time zone.”Markets beyond home exchange considered for IPO in 2030

Furthering the dip in Chinese market sentiment, the survey also found that respondents now think differently about future preferences for cross-border IPO exchanges. The NYSE took the number one spot, by a margin, at 37 percent, followed by the NASDAQ at 26 percent. London remains a strong contender in 2030, at 3rd equal with Hong Kong, both on 24 percent. India then comes in fifth followed by Shanghai, at 21 percent.

This collective response contrasts significantly with the previous survey, which showed China, India and Brazil were predicted to be the markets of choice for cross-border IPOs in the future – in the first, third and fourth spots in voting respectively. One reason given for the shift is that many companies have different avenues to raise their profiles in overseas markets, with local indices often preferred for better valuations.

“Although the growth of emerging market exchanges has been more subdued than anticipated in 2011, Chinese and Indian companies are still expected to dominate future new issues,” concludes PwC IPO Centre lead Ross Hunter. “While further progress in the key emerging market economies will support the growth of their exchanges, the pace of the shift in balance to these exchanges has perhaps moderated.”