IMPACT ANALYSIS: Big compliance challenges ahead in Asia — resources and regulatory overload

Compliance professionals indicated in a Regulatory Intelligence poll recently that their organisations are finding it increasingly hard to attract and retain suitably qualified staff. This shortage of skilled, experienced compliance personnel could become a real threat, and could even begin to affect the conditions of firms’ regulatory licences. The live survey, carried out during a webinar on the outlook for the year ahead, found that regulatory overload was the second-largest issue with which compliance professionals have to deal. Respondents reported that they sometimes struggled to keep abreast of developments.

Other concerns highlighted by compliance professionals included lack of budget, the impact of technology and the need to deal with, and resource, historic regulatory actions, which they said could prove a considerable distraction from day-to-day issues. Working across borders in the Asia-Pacific region also created significant challenges, particularly with regards to anti-money laundering (AML)/financial crime regulation, IT and cyber regulation, licensing requirements, data privacy and selling practices, respondents said.

Skills, talent and knowledge

To address these concerns, firms must take time to identify the skills they need most. One option would then be to hire capable staff who, while they may lack the full range of skills, can be retrained. Another option would be to upskill existing staff. Firms might also consider moving skilled staff into different areas to fill gaps, and making arrangements to provide employees with continuous training to ensure operational resilience.

Tips for compliance professionals

  • Identify the skills that will be most valuable in future for the organisation.
  • Assess whether the firm’s interview processes lead to the right people being hired.
  • Employ people who can attain the required skills and provide technology-linked learning and on-the-job training.
  • Devise a road map for improving compliance capabilities and improving skills.
  • Implement upskilling programs where skills gaps are identified.
  • Recruit keen hard workers from universities and industry.
  • The most unlikely can people turn out to be great compliance professionals — avoid having set expectations.

Regulatory overreach and overload

The sheer number of initiatives, rules, laws and guidelines issued by regulators has accelerated at an unprecedented pace in the past five years. Of particular concern is the growing lack of regulatory coherence across jurisdictions, which makes it harder, and more expensive, to do business. For example, by complying with U.S. and EU sanctions on China, companies face the possibility of tough sanctions when operating in China. Regulatory approaches can differ widely between jurisdictions. There is, for example, no agreed taxonomy for crypto trading; it is banned in China but allowed to a limited extent in other parts of Asia. Data protection laws differ materially across jurisdictions, and there are many different market rules across Asia-Pacific that place a burden on businesses.

Compliance professionals report that they frequently feel overwhelmed. As well as managing day-to-day responsibilities, they must also ensure internal controls are working and are in line with regulatory guidelines. They also need to be fully involved in the firm’s risk management controls to protect the interests of both customers and the organisation. Many firms are also having to deal with historical regulatory action. Such wide-ranging responsibilities can blindside compliance professionals. It may therefore be helpful to separate out real and immediate threats which must be dealt with at once from those which are hovering on the horizon.

Tips for compliance professionals

  • In the short term, concentrate on addressing the immediate threats to the organisation and its customers.
  • Ensure senior management have up-to-date regulatory intelligence about matters that may affect the firm.
  • Review the firm’s main compliance procedures to ensure they deal with both existing and emerging risks.
  • Set aside sufficient time for staff training and for discussion of emerging concerns.
  • Consider measures to improve compliance capabilities in particular areas of risk.
  • Provide regulators with feedback about regulatory overreach and overload so guidelines can be streamlined.

Compliance remit wider than ever

The remit of compliance professionals is wider than ever, and they must concentrate on finding solutions which protect both the organisation and its customers.

Niall Coburn is the Regulatory Intelligence Expert at Thomson Reuters in the Asia-Pacific region and a Barrister at the Queensland Bar.

As an expert on regulatory issues at Thomson Reuters, Niall writes articles, white papers, gives presentations in the region and liaises with the banking industry internationally concerning regulatory developments in the Asia-Pacific region.

Prior to joining Thomson Reuters, he was the regional Managing Director at FTI consulting, responsible for leading its Regulatory and Forensic Investigation Practice in Australia. FTI is a global consulting firm listed on the New York Stock Exchange with 500 offices worldwide.

Niall was also a Senior Lawyer and Specialist Adviser at the Australian Securities and Investments Commission. In this role he led high-profile investigations into complex corporate crime cases. He has also worked internationally, being part of a team that created the regulatory structure for the Dubai International Financial Centre (DIFC).

Niall was appointed Director of Enforcement at the DIFC in 2003 and worked with international law enforcement agencies to combat financial crime.

Niall has also worked in the Asia-Pacific region in his own consultancy, Coburn Intelligence in China and Hong Kong, investigating major frauds and misleading conduct in the investment industry.

Niall was awarded an Australia Day Honour from the Commonwealth Government for his work leading major criminal investigations at ASIC. He is a Barrister of the High Court of Australia and a member of the Queensland Bar Association and the International Bar Association.

 

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