Compliance Clarified – a podcast by Thomson Reuters Regulatory Intelligence Thomson Reuters

Financial services firms in the Asia-Pacific region have been shocked out of their complacency in the past year, with scams, frauds and other cyber-related crimes increasing exponentially. In Australia alone, consumers reported a record A$3 billion in losses last year — up from A$850m just two years earlier.

The rapid pivot to digital financial services and non-face-to-face business during the pandemic has been cited as a major driver for this trend. The economic turmoil in developing economies has also played a role, with vulnerable people being more likely to be recruited into cybercrime or online fraud syndicates.

In this episode of Compliance Clarified, we discuss this complex area with Helen Chan, a lawyer and regulatory risk expert with Thomson Reuters Regulatory Intelligence in Hong Kong.

IMPACT ANALYSIS: Compliance response from banks needed as human trafficking fuels proliferation of online scam syndicates: http://go-ri.tr.com/bEUean

COLUMN: SFC interest in market manipulation could cast scrutiny on influencer social media content: http://go-ri.tr.com/4YOqiq


Compliance Clarified is a podcast from Thomson Reuters Regulatory Intelligence.
Listen to wide-ranging, insightful discussions on all things compliance for financial services firms. We delve into the hot topics of the day, the challenges faced and offer up practical ideas for emerging good practice. We de-mystify regulation and explore the art, as well as the science, of the ever-expanding role of the compliance officer.  Enforcements, digital transformation, regulatory change, governance, culture, conduct risk – anything and everything impacting the compliance function is up for discussion.

Compliance officers are operating with limited sets of resources while simultaneously managing a diverse and expanding range of subject areas where the volume of regulatory change is expected to increase. The 14th annual Cost of Compliance, published by Thomson Reuters Regulatory Intelligence, found costs are expected to increase with difficulties recruiting appropriately skilled staff also reported.

In this episode of Compliance Clarified, managing editor, Alex Robson, is joined by Mike Cowan, senior regulatory intelligence expert, on the findings of the report. The research was carried out before the latest developments in generative AI, which they also discuss.

In 2022, the number of regulatory events monitored by TRRI was 61,228, the third-highest annual total since 2008. This figure covered 1,374 regulators in 190 countries, equivalent to an average 234 daily alerts. And in the coming year 73% of respondents said they expected an increase in regulatory activity.

This increase in regulatory activity was also seen as a compliance challenge for both corporate boards and compliance officers were keeping up with the volume and implementation of regulatory change and managing growing regulatory expectations featured prominently in many respondents' responses.

The "Compliance Clarified" podcast series covers the wide range of topics which affect compliance at financial services firms and aims to help compliance officers make sense of the often-challenging regulatory environment. It considers the big challenges of the day and offers practical ideas for emerging good practice.

Programme notes:

Visit the Thomson Reuters Institute to download a free copy of the report: www.thomsonreuters.com/en/institute.html

Subscribers to Regulatory Intelligence can find a copy on the home page.


Compliance Clarified is a podcast from Thomson Reuters Regulatory Intelligence.
Listen to wide-ranging, insightful discussions on all things compliance for financial services firms. We delve into the hot topics of the day, the challenges faced and offer up practical ideas for emerging good practice. We de-mystify regulation and explore the art, as well as the science, of the ever-expanding role of the compliance officer.  Enforcements, digital transformation, regulatory change, governance, culture, conduct risk – anything and everything impacting the compliance function is up for discussion.

Anti-money laundering (AML) control failings at Santander Bank UK opened the door to a financial intermediary with links to Colombian drug cartels operating in Britain. Beltcastle, a payments service provider, is "Customer A" featured in the Financial Conduct Authority's (FCA) final notice in December 2022 to illustrate the failures behind Santander's £107 million fine.

Beltcastle, which was authorised by the UK regulator for eight years, put about £1.3 billion in cash through the UK Post Office. The firm had accounts at Barclays, NatWest, and Ghana International Bank. The Post Office was used in the suspected laundering scheme, passing thousands of pounds regularly from Beltcastle through its cash collection and processing service.

The case has raised serious issues about adverse media searches and information sharing, as Rachel Wolcott, senior editor in London, tells Alexander Robson, managing editor, in this episode to kick off the new series.

The "Compliance Clarified" podcast series covers the wide range of topics which affect compliance at financial services firms, and aims to help compliance officers make sense of the often-challenging regulatory environment. It considers the big challenges of the day and offers practical ideas for emerging good practice.

Programme notes

SPECIAL REPORT: Santander AML failures opened door to intermediary linked to Colombian drug cartels; UK Post Office, banks used to move £1.3 billion: https://www.reuters.com/article/bc-finreg-santander-aml-failures-drug-ca/special-report-santander-aml-failures-opened-door-to-intermediary-linked-to-colombian-drug-cartels-uk-post-office-banks-used-to-move-1-3-billion-idUSKBN2WO1W8

From behind Regulatory Intelligence paywall

UK Companies House reports few operational incidents, employs no dedicated risk managers: https://regintel-content.thomsonreuters.com/document/I118F6F40EB2A11ED9DA6D001824C624B

Companies House's new identity verification measures fall short of minimum standards, MPs hear: http://go-ri.tr.com/I2JILV

UK admits hundreds of millions laundered through Post Office annually, FCA sets out "current expectations" to address risk: http://go-ri.tr.com/RcNc1q

For further information, contact rachel.wolcott@thomsonreuters.com or alexander.robson@thomsonreuters.com


Compliance Clarified is a podcast from Thomson Reuters Regulatory Intelligence.
Listen to wide-ranging, insightful discussions on all things compliance for financial services firms. We delve into the hot topics of the day, the challenges faced and offer up practical ideas for emerging good practice. We de-mystify regulation and explore the art, as well as the science, of the ever-expanding role of the compliance officer.  Enforcements, digital transformation, regulatory change, governance, culture, conduct risk – anything and everything impacting the compliance function is up for discussion.

The triggering of a complete write-down of the nominal value of all Credit Suisse AT1 debt has come as a shock to some investors. Regulators took what some saw as an irregular move to write down 16 billion Swiss francs of Credit Suisse bonds, known as Additional Tier 1 or AT1 debt, to zero, during UBS's rescue of Credit Suisse on the weekend of March 18/19.

In this episode of Compliance Clarified, Alexander Robson, managing editor of Regulatory Intelligence in London, is joined by Helen Parry, senior regulatory intelligence expert in London to discuss contingent convertibles, otherwise known as CoCo bonds, and the reasons why regulators acted the way that they did.

Under the deal, holders of Credit Suisse AT1 bonds will get nothing, while shareholders, who usually rank below bondholders in terms of who gets paid when a bank or company collapses, will receive $3.23 billion. The news hurt AT1 bonds issued by other European banks and they came under fresh selling pressure.

If AT1s are converted into equity, this supports a bank's balance sheet. They also pave the way for a "bail-in", or a way for banks to transfer risks to investors and away from taxpayers if they get into trouble, according to rules that policymakers passed after the 2008 financial crisis.

In Switzerland, the terms of the bonds stipulate that in a restructuring, the regulator is not obliged to stick to the traditional capital structure, which has spelt bad news for Credit Suisse bondholders. It has also raised eyebrows among other regulators elsewhere.



PROGRAMME NOTES

FINMA approves merger of UBS and Credit Suisse: www.finma.ch/en/news/2023/03/20230319-mm-cs-ubs/

Factbox: Credit Suisse's troubles - spies, money laundering and takeover: www.reuters.com/business/finance/credit-suisses-troubles-spies-money-laundering-central-bank-cash-2023-03-16/

How Credit Suisse has evolved over 167 years: www.reuters.com/business/finance/how-credit-suisse-has-evolved-over-167-years-2023-03-18/



(From behind the Regulatory Intelligence paywall)

UBS faces huge cultural challenge in integrating Credit Suisse, say consultants: http://go-ri.tr.com/YI8NM3

OPINION: Scale of U.S. banks' unrealized losses, distressed borrowing and central bank actions point to wider problems: http://go-ri.tr.com/oyHrxD



Compliance Clarified is a podcast from Thomson Reuters Regulatory Intelligence.
Listen to wide-ranging, insightful discussions on all things compliance for financial services firms. We delve into the hot topics of the day, the challenges faced and offer up practical ideas for emerging good practice. We de-mystify regulation and explore the art, as well as the science, of the ever-expanding role of the compliance officer.  Enforcements, digital transformation, regulatory change, governance, culture, conduct risk – anything and everything impacting the compliance function is up for discussion.

The collapse of Silicon Valley Bank sent shockwaves through the venture capital and technology industries. It has had uncomfortable echoes of the 2008 financial crisis with regulators and other policymakers working through the weekend to engineer solutions to avoid further contagion and possible systemic risk. And that was the weekend of 11/12 March; this weekend just gone, regulators and policymakers were busy with the shotgun wedding of UBS and Credit Suisse.

In the UK, HSBC has bought SVB and its liabilities to the tech sector for £1, but the situation is different in the United States where the Federal Deposit Insurance Corporation has stepped in to protect all deposit holders, even though most of them (mainly venture capital firms and tech companies) have way more in their accounts than the insured amount of $250,000.

The collapse of the specialist lender has raised plenty of questions about risk management and the role played by regulators.

Most of SVB's balance sheet was in longer dated bonds and the value of these fell as rates rose, which caused the subsequent run on the bank. Few seem to have questioned why no one at the bank appeared to hedge their risk.

Events are still unfolding but with different results on either side of the Atlantic. There are many unknowns directly related to possible compliance and risk management concerns. As more facts surface, regulators and lawmakers are sure to investigate any failures in these areas. Such inquiries often lead to new regulations or regulatory change in the future.

In this episode of Compliance Clarified, Alexander Robson, managing editor of Regulatory Intelligence in London, talks to Henry Engler, senior editor in New York and Mike Cowan, senior Regulatory Intelligence expert in London.

Program notes:

Silicon Valley Bank collapse: What you need to know now: https://www.reuters.com/business/finance/silicon-valley-bank-collapse-what-you-need-know-2023-03-13/

SVB Financial files for bankruptcy protection after swift implosion: https://www.reuters.com/business/finance/how-svb-financial-group-imploded-two-days-2023-03-14/

SVB is largest bank failure since 2008 financial crisis: https://www.reuters.com/business/finance/global-markets-banks-wrapup-1-2023-03-10/

Behind the Regulatory Intelligence paywall

INSIGHT: Five important regulatory aspects of the Silicon Valley Bank collapse: http://go-ri.tr.com/S5LTLf

OPINION: Scale of U.S. banks' unrealized losses, distressed borrowing and central bank actions point to wider problems: http://go-ri.tr.com/oyHrxD

U.S. lawmakers to hold first hearing on SVB, Signature Bank collapse: http://go-ri.tr.com/7AcwNS


Compliance Clarified is a podcast from Thomson Reuters Regulatory Intelligence.
Listen to wide-ranging, insightful discussions on all things compliance for financial services firms. We delve into the hot topics of the day, the challenges faced and offer up practical ideas for emerging good practice. We de-mystify regulation and explore the art, as well as the science, of the ever-expanding role of the compliance officer.  Enforcements, digital transformation, regulatory change, governance, culture, conduct risk – anything and everything impacting the compliance function is up for discussion.

The world's largest primary bullion producer, Australia's Perth Mint, has found itself at the centre of one of the country's biggest risk and compliance failures following a six-month investigation led by Thomson Reuters Regulatory Intelligence. The government-owned entity has found itself defending regulatory spot fires on a range of fronts. These include a major money laundering audit, answering parliamentary questions about sub-standard gold deliveries to Shanghai, defending a failure to register as a remitter in breach of criminal laws, and explaining a 25-year failure to comply with U.S. commodities laws.

The internationally renowned mint has also come under scrutiny from the world's largest gold market, following allegations that the Perth Mint failed to prevent money laundering and terrorism financing through its precious metals supply chain. The London Bullion Market Association's review into Perth Mint will look at a range of "responsible sourcing" concerns, including compliance with international anti-money laundering, terrorism financing and sanctions laws.

The state-owned Perth Mint has exposed taxpayers to a potential billion-dollar penalty for systemic anti-money laundering compliance breaches of federal law on thousands of occasions. This includes at least 5,000 strict liability cross-border funds transfer reporting offences. The penalty for the international funds transfer instruction (otherwise known as IFTI) reporting breaches carries a theoretical A$105 billion upper limit if AUSTRAC, the Australian Transaction Reports and Analysis Centre, chooses to litigate. AUSTRAC has ordered an independent expert to examine a raft of other breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

The case has now become a major political issue, with Opposition politicians and media commentators calling for an urgent royal commission into the mint's governance failures.

From Regulatory Intelligence (behind paywall):

Perth Mint in breach of U.S. commodities laws for 25 years, says internal report: http://go-ri.tr.com/kUtsCp

Perth Mint's woes deepen as London Bullion Market Association investigates supply chains, laundering: http://go-ri.tr.com/BrpH9e

OUTLOOK 2023-Australian regulators begin year with huge enforcement case load: http://go-ri.tr.com/sJ1aR3

EXCLUSIVE: Perth Mint knew about AML problems in March 2021 -internal documents: http://go-ri.tr.com/gRjcOD

Perth Mint in AUSTRAC's crosshairs over suspected money laundering breaches: http://go-ri.tr.com/gqGstx

ANALYSIS: How a government became embroiled in a billion-dollar criminal gold laundromat: http://go-ri.tr.com/CPkOrZ

Perth Mint may have exploited registration loophole in AML/CTF Act, says WA government: http://go-ri.tr.com/W4Kw6J

Premier speaks out on WA government's gold laundering scandal: http://go-ri.tr.com/sLwEEX

Government taking gold laundromat allegations "very seriously", says WA Premier: http://go-ri.tr.com/sLwEEX


Compliance Clarified is a podcast from Thomson Reuters Regulatory Intelligence.
Listen to wide-ranging, insightful discussions on all things compliance for financial services firms. We delve into the hot topics of the day, the challenges faced and offer up practical ideas for emerging good practice. We de-mystify regulation and explore the art, as well as the science, of the ever-expanding role of the compliance officer.  Enforcements, digital transformation, regulatory change, governance, culture, conduct risk – anything and everything impacting the compliance function is up for discussion.