Asia Risk and Compliance Newsletter

Asia Risk and Compliance Newsletter

July 2017

Welcome to the next edition of Protiviti’s Asia Risk and Compliance newsletter. In close collaboration with our Protiviti offices in the USA and Europe, this newsletter provides a summary of important risk and compliance developments in financial services across Asia.

Recent developments in Asia include Hong Kong’s establishment of a joint fraud and money-laundering task force and Singapore’s consultation paper on draft regulation resulting from the Securities and Futures (Amendment) Act of 2017. Further afield, the Organisation for Economic Co-Operation and Development (OECD) updated its tax transparency index.

Round-up of Regional Updates in Asia


HKMA 2016 Annual report
(Published 28 Apr 2017)

The Hong Kong Monetary Authority (HKMA) has published its annual report, which reviews trends and events in monetary and banking affairs, and reports on the HKMA’s work during 2016. It also sets out the HKMA’s work plans for 2017.

Hong Kong’s Securities and Future Commissions (SFC) has launched a consultation effort on proposed guidelines on online distribution and advisory platforms of non-complex products, which includes including shares listed on regulated exchanges, non-complex bonds, SFC-authorized funds and SFC- authorized real estate investment trusts.

The proposed guidelines aim to provide tailored guidance to the industry on the design and operation of online platforms, and clarify how the suitability requirement would operate in the online environment. 

In a joint statement, five Asian regulators welcomed the issuance a single global code of conduct for the wholesale foreign exchange (FX) market, which was formally launched via an endorsement by the Global Foreign Exchange Committee during a meeting held in London.

The code sets out principles that are intended to promote a robust, fair, liquid, open and appropriately transparent market, underpinned by high ethical standards.

A Fraud and Money Laundering Intelligence Taskforce as part of a 12-month pilot project has been launched by the Hong Kong police in collaboration with the HKMA, the Hong Kong Association of Banks and a number of banks.

The purpose of the newly-established taskforce is to bring together, under one roof, the collective expertise and resources of government and industry to enhance the detection, prevention and disruption of serious financial crime and money laundering threats. 

Chinese banks will be required from 1 September 2017 to report all their bank card holders' overseas withdrawals on a daily basis, plus every bank transaction that exceeds 1,000 yuan ($146.7). Currently, reporting is only required as a combined figure for all overseas transactions as a daily aggregate amount. Additionally, the overseas withdrawals of UnionPay cardholders are capped at 10,000 yuan per day, with an annual cap of 100,000 yuan.
The new measure, which was based on a request by the Chinese Administration of Foreign Exchange, is focused on strengthening regulatory oversight of overseas transactions on Chinese bank cards and aid with enforcement of capital control regulation. It is also expected to help with data analysis related to money laundering, terrorist financing and tax avoidance. 

The HKMA has published an AML/CTF-related circular providing regulated financial institutions with an update on the proposed changes resulting from the recently tabled Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) (Amendments) Bill 2017.

If approved, updates are expected to touch on definition of beneficial ownership; identification and verification; wire transfers and customer due diligence by intermediaries, among others.



As regulatory bodies in Singapore, United States and other jurisdictions continue to review financial transactions related to 1-MDB, the Malaysian government’s strategic development company, Singapore’s MAS has completed its two-year review of banks involved in 1-MDB-related transactions known to-date. In its latest regulatory actions related to this matter, MAS has imposed financial penalties on Credit Suisse and United Overseas Bank (UOB), in addition to previously issued fines and license withdrawals. The MAS also issued prohibition orders (POs) against three individuals, with additional investigations still on-going.

On 28 April 2017, Singapore’s MAS issued Consultation Paper I on Draft Regulations Pursuant to the Securities and Futures Act, seeking comments on draft regulations aimed at supporting upcoming amendments to the Securities and Futures (Amendments) Act. Among other things, the act introduces amendments aimed at implementing over-the-counter derivatives regulatory reforms and enhancing the credibility and transparency of the capital markets, which were the focus of the consultation paper, comments for which closed on 2 June 2017.

A second consultation round began on 26 May that focused on licensing and conduct of business regulation.

Singapore and Australia are joining forces to face the many challenges posed by cybercrime security. The initial two-year agreement to help ensure the resiliency and security of cyberspace follows on from similar agreements the Cyber Security Agency of Singapore (CAS) has with other nations including the USA, UK and France.

Thematic Article

U.S. Treasury Report Proposes Changes to the Financial Regulatory System

As part of the Trump Administration’s drive to reduce regulatory burdens impacting US companies generally, the U.S. President Donald Trump has directed regulatory agencies to review existing requirements for obsolescence and/or undue burden on firms. The U.S. Department of the Treasury has issued its first in a series of reports required by Executive Order 13772 examining the consistency, or lack thereof, of the United States’ financial regulatory system with the seven core principles of regulation included in the executive order. The report recommends a series of actions that can be undertaken in both the short term and in the ensuing years.

The report, A Financial System That Creates Economic Opportunities, focuses on proposed changes for depository institutions (i.e., banks and credit unions), but defers for the time being consideration of the Dodd-Frank Wall Street Reform and Consumer Protection Act’s orderly liquidation framework. Three subsequent reports will focus on capital markets, asset management, insurance and non-bank financial institutions, including financial technology and innovation.

At a high level, one of the main positions of the first report is that the Dodd-Frank Act has increased the burden of regulatory compliance without adequate cost-benefit analysis and prolonged the moral hazard arising from regulations that could lead to taxpayer-funded bailouts. Many of the recommendations involve rolling back certain aspects of Dodd-Frank.

This first report concludes:

  • Capital and leverage rules can be simplified to increase the flow of credit and to ensure U.S. banks are globally competitive.
  • Market liquidity must be improved, which can be accomplished, in part, by amendments to the Volcker Rule (a part of the Dodd-Frank Act which restricted the ability of financial institutions to conduct proprietary trading on their own behalf).
  • The Consumer Financial Protection Bureau (CFPB) must be reformed.
  • Regulations need to be better tailored, more efficient and effective.
  • Congress should review the organization and mandates of the independent banking regulators to improve accountability.

While many of the proposed changes in this report are similar to the Financial CHOICE Act (a bill proposed by the U.S. Congress) in some aspects, it appears more practical in orientation and thus initial reactions are that the Treasury’s proposals have a greater chance of adoption.

Although the Treasury’s recommendations seek to “right-size” financial regulation and remove unnecessary regulatory duplication and overlap, Protiviti anticipates that key elements of the existing regulatory framework will be retained through any reform. These elements include: explicit, appropriately risk-sensitive capital standards; supervised stress-testing, appropriately tailored based on banking organizations’ complexity; explicit, measurable and transparent liquidity requirements; actionable living wills for the largest systemically-important banks; and enhanced prudential standards, based on the size and complexity of financial institutions.

Our Flash Report provides greater detail on the Treasury’s recommended changes in each of the individual areas of focus.

Global news update/round-up

The Global News round-up focuses on coverage of developments and updates in the United States, in Europe and updates from inter-governmental bodies.


The US Department of Treasury, through the Office of Foreign Asset Control (OFAC), made multiple additions to the North Korea Special Designation Nationals (SDN) list throughout June.In light of the on-going US foreign policy towards North Korea, further additions to the North Korean SDN are highly likely.


The UK’s Financial Conduct Authority (FCA) has provided an update on its regulatory sandbox and has unveiled the list of successful firms that will begin testing in the second cohort of the sandbox project.
The update includes a brief business description of all accepted entities, which cover a wide range of areas including: cross-border remittance, digital wallets, block- chain, insurance and risk management.


The UK’s FCA has published the final findings of its asset management market study, which includes a package of remedies it will take forward to address the concerns identified in its interim report into the sector.
The main three areas the FCA intends to address are: providing protection for investors who are not well placed to find better value for money; driving competitive pressure on asset managers; and helping to improve the effectiveness of intermediaries.


The OECD has published its Global Forum fast-track review results following on from the request at the 2016 G20 meeting for identification of jurisdictions failing to make sufficient progress towards the implementation of agreed international standards on tax transparency.
From the 15 countries previously rated as less than satisfactory, 13 (86 per cent) were able to improve and score as “Largely Compliant,” including countries such as Panama and the UAE. Trinidad and Tobago was unable to demonstrate sufficient progress and remained rated as “Non-Compliant.” The Marshall Islands were uplifted a notch from Non-Compliant to “Partially Compliant.”


The European Central Bank (ECB) has decided to progress with its plan to help enable instant payments across the Eurozone. The new system, known as “TIPS” (Target Instant Payment Settlement), will enable citizens and firms to transfer money between each other in real time and will be available around the clock, 365 days a year. The expected go-live for the new service is scheduled for November 2018.

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