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5 July 2012
Leas Bachatene – Vice President, Managing Director Asia Pacific
Thomson Reuters Governance Risk & Compliance
THE CHALLENGE OF REGULATION AND COMPLIANCE
RULES OF BUSINESS ARE BEING REWRITTEN
THE REGULATORY DELUGE
2
REGULATORY ACTIVITY TRACKED 2010-2011
*Note: Tracked activity includes document changes, announcements, and enforcements by regulators.
COMPLIANCE CHALLENGES WHAT WEALTH MANAGERS NEED TO KNOW
4
THE CONSEQUENCES OF NON-COMPLIANCE
• Increased fines and enforcements
• Reputational damage with clients, prospects, and your market
• Imprisonment and loss of license
Date Institution Agency
Fine/
Imprison
ment
Violation
June
28 Barclays
UK & US
Regulator $ 453M Libor Rate Manipulation
May
30 JP Morgan CFTC TBC Poor Corporate Governance
Oct
2011
Raj Rajaratnam, head
of Galleon Group
hedge fund
DOJ, SEC,
Manhattan
DA
$102.8M
11 yrs
prison
Insider trading
Aug
2010 Barclays PLC
DOJ,
Manhattan
DA
$298M
Facilitated and concealed wire
transfers to and from blacklisted
countries
THE CONSEQUENCES OF NON-COMPLIANCE
• Increased fines and enforcements
• Reputational damage with clients, prospects, and your market
• Imprisonment and loss of license
Date Institution Agency
Fine/
Imprison
ment
Violation
May
2010 Royal Bank of Scotland DOJ $500M
Facilitated and concealed wire
transfers to and from blacklisted
countries
Feb
2010 Daimler AG DOJ, SEC $200M
“Improper payments” in a number
of jurisdictions, including Africa,
Asia, and Eastern Europe
Jan
2009 Lloyds TSB
DOJ,
Manhattan
DA
$350M Falsifying wire transfers destined
for Sudan, Iran and Libya
OVERVIEW ON COMPLIANCE CHALLENGES
• FATCA is what seems to be causing the banks the biggest challenge
• Regulators in Asia are getting a lot tougher about approving wealth management products and looking at the miss-selling procedures in place
• Singapore’s brought in a new code of conduct for private bankers and Hong Kong there are much tougher rules now for structured products
• In the less developed financial centres, there is an issue of regulatory uncertainty and barriers for foreign banks.
• FCPA and UK Bribery Act
• Dodd Frank still a work in progress and still haven’t finalized drafting how the rules will reach overseas. However, those rules and the other new rules on derivative trading coming in across Europe and Asia mean that banks will have a lot of operational work to do to connect all their trading systems up to central clearing houses and trade repositories.
GRC GOVERNANCE, RISK & COMPLIANCE
8
CONNECTING THE GRC BUSINESS COMMUNITY
Connect business strategy, operations and business transactions
to the ever-changing regulatory environment, so firms can go fast
while managing risk.
A CONNECTED GRC STRATEGY
By connecting compliance, audit, risk and legal, organisations can make informed decisions and
accelerate their business while managing risk.
TECHNOLOGY SOLUTIONS
• Regulatory Tracker
• World-Check & Enhanced Due Diligence
• FATCA
• Transaction monitoring /email monitoring
• Compliance Manager
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TRACKER AND POLICY MANAGEMENT SOLUTIONS
– Dynamically link policies to the
underlying rulebooks
– Easily manage version and
hierarchy control
– Enable easy sharing through
intuitive workflow and update
distribution
– Evidence policy adoption
(through RecordKeeper)
SCREENING SOLUTIONS (NEW)
– Initial and on-going screening
against an unrivaled and
unique data set, built by our
own research team
– Ensure client and customer
identity with Electronic Identity
Verification
– Screen for potential risks with
Adverse Media searching
– Understand the risks
associated with Politically
Exposed Persons
– Gain a deeper understanding
of clients, suppliers & partners
in emerging markets
– Monitor transactions
– Screen vessels against
sanctions and enforcements
TRANSACTION MONITORING / EMAIL MONITORING
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COMPLIANCE AS A COMPETITIVE ADVANTAGE
TO DO MORE WITH LESS
15
So what are the three things you should do?
• People and expertise
• Culture is probably the most important aspect of
implementing GRC and the board and CEO needs to set
the tone at the top.
• The right expertise, and providing the right training is
critical. One of the most effective ways of improving
governance and compliance quickly is training employees
in the standards expected of them by the company –
• Companies have learned that their employees can be the
largest source of risk, they also learn that changing
employee behaviour is the best way of managing risk and
can be your first line of defence.
16
So what are the three things you should do?
• Insist on “Better Information not More Information”
Our mission at Thomson Reuters is to provide better
information. Of those 15,000 regulatory updates that
Thomson Reuters track from 300 regulators around the
world every year (an average of 60 updates) a day, which
is the one that if missed could put your business at risk?
• Standardise processes and better controls around
your risks, prioritising where the largest risks are and
placing standard controls and checks in place – driving
growth whilst ensuring standards are maintained is the
primary goal of any GRC workflow and control tool
17
2012 SPECIAL REPORT – THE STATE OF REGULATORY REFORM
18
QUESTIONS
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