Data privacy, conduct & culture, cybersecurity and AML will be in focus in APAC for the next three years, according to a new report from Fenergo.
Fenergo has issued a new report on its global regulatory outlook for 2019-2021, citing data privacy, conduct & culture, cybersecurity and AML as some of the top issues for APAC markets.
Post-crisis reforms have improved the resilience of financial institutions and the overall financial system, the report says. But, the flipside is that many financial institutions are grappling still with an “ever-increasing regulatory burden consisting of complex and often conflicting global and local due diligence rules”.
Since 2008, some USD 27 billion has been levied in fines against financial institutions for lapses in compliance with regulations on AML, KYC and sanctions – including USD 3.8 billion in 2018 alone. AML is indeed expected to be one of the dominant themes in APAC for the coming year, the report said.
According to the report, the annual spend on financial crime compliance at financial institutions around the world is estimated at between USD 900 million and USD 1.3 billion.
In 2019, Fenergo expects that regulatory priorities will include a continued focus on data privacy, OTC derivatives reform and cybersecurity. While the US is largely focused on regulatory reform and Europe is working through 4MLD implementation and preparing for the impacts of Brexit, Asia Pacific regulators are “playing catch up” in several areas.
Data Privacy – Thailand, India, Indonesia and Vietnam have all published draft data protection bills as start to take steps towards gaining EU adequacy status. In direct conflict with the EU’s data localisation prohibition, India and Vietnam, like China, are implementing strict regimes with data localisation provisions.
Conduct & Culture – Driven by the Australia’s Royal Commission, which also prompted a review in New Zealand, APAC regulators are focused on conduct and culture reviews to address misconduct and unfair treatment of customers with changes in remuneration and sales incentive practices, and a greater focus on conduct oversight and individual accountability.
Cybersecurity – Singapore, Hong Kong and Australia have already issued specific cyber-risk management and information security guidance. Standards on third-party outsourcing are also under review.
“Ensuring compliance with upcoming regulatory requirements and expectations will be challenging for global firms in 2019,” the report says. “In designing suitable approaches and frameworks for managing regulatory risk, financial institutions must consider the principles of organization and collaboration.”
It’s imperative to have a structured approach when developing regulatory solutions, Fenergo says, and equally, to collaborate with industry peers for knowledge sharing and regulatory monitoring.
The full report is available here.