27 ASIAN LEGAL BUSINESS – JUNE 2024 WWW.LEGALBUSINESSONLINE.COM WHITE-COLLAR CRIME on the assumption of human carelessness or inattention than on technology. Training employees to be vigilant (and to raise concerns when a transaction looks suspicious) and making sure standard accounting controls are in place goes a long way towards preventing financial crime,” they say. “We also should not become too despondent about global instability as, despite other disagreements, there is still global consensus when it comes to combatting financial crimes. Groups like FATF and APG coordinate national responses to money laundering, and despite all the tensions in the U.S.-China relationship, in April 2024, the U.S. and China announced a Joint Treasury-PBOC Cooperation and Exchange on Anti-Money Laundering,” Hughes and Rohlik added. Indeed, regulatory bodies like the FATF, MONEYVAL and APG play a significant role in promoting the effective implementation of legal, regulatory, and operational measures for combating ML/TF. Ang at Norton Rose Fulbright explains that recommendations by the FATF have prompted many countries to introduce legislation to regulate emerging areas of ML/TF risks, such as that presented by corporate service providers or classes of high-value assets like cryptocurrency, as well as precious stones and precious metals. “Mutual evaluation assessments conducted by bodies such as the FATF or APG are also effective in monitoring countries’ compliance with international standards and prompting more active implementation of AML/CFT measures,” Ang adds. Another significant challenge, particularly in the retail and corporate banking, capital markets, and private banking and wealth sectors in Asia, is the misuse of corporate vehicles and the opacity of beneficial ownership, making it difficult for regulated entities to fulfil their AML/ CFT obligations. “The Singapore Government is taking steps to address the issue through initiatives like COSMIC and legislative amendments (in particular, to combat the misuse of nominee directorship arrangements by prohibiting persons from acting as nominee directors unless their appointments are arranged by registered CSPs), though we expect that more will certainly have to be done – not only on the part of policymakers but also industry participants – to ensure that effective know-your-customer / customer due diligence measures and procedures are implemented,” Ang says. Economic turbulence also remains a strong driver of financial crime, as was seen in the FTX case. “Businesses, and their executive and owners, are under immense pressure to demonstrate success -enchanted revenues, profits and share prices (particularly for businesses with publicly listed equity). But if underlying conditions are poor - this means an increased tendency to engage in financial corporate fraud, or stock market manipulation—a trend which we have been seeing through the increasing number of appointments we are seeing as counsel to special committees of boards,” Rogers at Davis Polk explains. Asia is also poor when it comes to whistleblower protection, and better regulations to protect whistleblowers balanced with defence against false allegations need to be set up. “In our experience, a large proportion of investigations involving suspected financial crime by employees of corporates and financial institutions are triggered by whistleblowing complaints. False allegations are a problem for any whistleblowing system, but on balance, the experience is that whistleblowing should be further encouraged, with support from senior management of organisations and protection of both whistleblowers and targets of the complaints, until the outcome of investigations,” Rogers says. LOOKING AHEAD Experts believe the best way to tackle financial crime is through building more expertise locally and enhancing crossborder coordination, particularly given the international nature of modern techbased financial crime and the continuing dominant role of the U.S. dollar and banking system. But, cross-border cooperation across Asia’s economic, cultural and political diversity is extremely challenging. While most countries across Asia are aware of crypto-based laundering and related crimes, few have implemented stringent provisions to identify, prevent, and punish such activities, often relying on the private sector to ensure best practices. “Asian governments need to hire sufficient experts as a priority and ensure sufficiently large budgets for anti-financial crime R&D. AML can drive technology investment by private financial institutions, but this is not sufficient,” Rogers says. He explains that governments need their own international-standard experts to (a) formulate and drive effective and balanced policies, (b) staff financial crime police capabilities, (c) provide support for critical infrastructure protection, (e) provide public education against scams and hacking, and (d) participate in regional, inter-governmental meetings. Summarily put, there needs to be as much governmental level and crimeagency collaboration as possible to combat cross-border financial crime in the region. “I would like to see the focus on collaboration against financial crime being given even higher priority and status by ASEAN, and also broader collaboration covering the whole of Asia,” Rogers says. “We should not become too despondent about global instability as there is still global consensus when it comes to combatting financial crimes.” — Gareth Hughes and Philip Rohlik, Debevoise & Plimpton
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