The rise of transparency
The push for increased financial transparency and ethical business practices has gained significant momentum around the world. There’s a growing recognition globally that transparency is fundamental to ethical business conduct and robust corporate governance. It is also instrumental in combatting financial crime by illuminating business operations, financial transactions, ownership structures and the individuals involved.
In response to this paradigm shift, there has been a corresponding rise in regulatory measures worldwide, aiming to enforce these transparency standards and uphold ethical business practices. The Asia-Pacific (APAC) region aligns with this global movement, demonstrating a commitment to rigorous regulatory oversight across its diverse and dynamic markets.
Evolving regulatory frameworks
Businesses operating in and expanding into the APAC region are required to navigate and adhere to a complex array of both international and regional regulations that influence corporate and financial transparency. It’s a dynamic regulatory environment, with new measures continually emerging to bolster Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) controls and practices.
The following are just a few examples from a broad spectrum of recent regulatory developments:
- China:
The People’s Bank of China (PBOC) introduced The Measures for the Supervision and Administration of Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) of Financial Institutions (Measures), effective from August 2021. These measures represent a significant step in refining AML supervision, extending the breadth of institutions covered. - Singapore:
Upholding its commitment as an active member of the Financial Action Task Force (FATF) and as a founding member of the Asia/Pacific Group on Money Laundering, Singapore continues to implement new measures. Notably, the Financial Services and Markets Act 2022 and the proposed introduction of the Corporate Service Providers Bill (CSP Bill) are designed to align closely with FATF’s recommendations, thereby strengthening AML and CFT frameworks. - India:
Amendments to the Prevention of Money Laundering (PMLA) Rules were introduced in 2023, with significant changes including the alteration of thresholds for identifying beneficial owners in companies and trusts. Furthermore, the Securities and Exchange Board of India (SEBI) revised the Foreign Portfolio Investors (FPI) Regulations, affecting the onboarding process and documentation requirements for FPIs.
These instances represent just a snapshot of the ongoing regulatory evolution in the APAC region, illustrating the vital need for firms to stay informed and compliant in this ever-changing landscape
The need for comprehensive customer and business verification processes
Laws like these continue to evolve as governments and regulatory authorities work to track money flows more effectively and prevent their misuse for illicit activities. This necessitates comprehensive customer and business verification processes, ensuring that financial institutions and businesses know precisely who they are dealing with. In this environment, robust KYC (Know Your Customer), KYB (Know Your Business) and Ultimate Beneficial Owner (UBO) checks cannot be overstated.
These processes prevent companies from inadvertently facilitating illegal activities by verifying customer identities, confirming entity legitimacy and untangling complex ownership structures. It goes without saying, these checks are a legal requirement. Non-compliance can result in severe penalties, including substantial fines and potential criminal charges.
The compliance conundrum
In order to conduct thorough KYB, KYC and UBO screening, organisations need access to accurate, up-to-the-minute data on millions of individuals and entities in their countries and regions of focus. However, obtaining this data and the granular level of detail required can present a significant challenge in the face of increasingly stringent data protection regulations.
This creates a compliance conundrum where firms must balance the need to collect and process often personal and sensitive customer data to meet transparency requirements, with the obligation to respect global and local data protection laws.
Finding the right balance between transparency and privacy is complex for businesses looking to expand their horizons and tap into the vast opportunities presented by the APAC region’s markets – given the diverse and sometimes contrasting legal landscapes. Each country has its own set of regulations governing data protection and privacy, alongside those mandating transparency for AML/CFT.
A paradigm shift in privacy
The exponential increase in data protection laws across the world in the last decade reflects the desire of individuals and governments to ensure that data is held securely, processed fairly and transparently, and that individuals are able to exercise their rights in relation to data.
From 2021 to 2023, the APAC region saw a substantial increase in the scope and breadth of its privacy legislation, with some studies reporting as much as a 25% increase. In this period, several jurisdictions, including China, Thailand, Indonesia, Sri Lanka and India, have begun to adopt or are in the process of enacting their first comprehensive privacy laws. Concurrently, countries with well-established privacy frameworks, such as Australia, Japan, Korea, New Zealand and Singapore, are actively revising their laws align with global developments.
While these laws fundamentally agree on key data privacy principles, the specific regulations and obligations vary significantly across different jurisdictions. This disparity is particularly noticeable in aspects such as the legal foundations for processing and transferring personal data internationally, and in the timelines stipulated for informing authorities and individuals about data breaches.
Businesses must be acutely aware of data localisation laws, which may mandate that data about a country’s citizens or residents be collected, processed and stored within that country. For organisations operating across multiple countries, this means carefully navigating these diverse legal requirements to ensure compliance while accessing and sharing data across borders.
Harmonising compliance processes with diverse legal requirements
The varying legal systems in different APAC jurisdictions, along with differences in transparency laws, create challenges for ensuring compliance with privacy laws. This complexity extends to establishing standardised processes for Know Your Business (KYB), Know Your Customer (KYC), and Ultimate Beneficial Ownership (UBO) that are effective and compliant in each jurisdiction. As a result, compliance costs increase, and there can be impacts on customer onboarding and overall service efficiency.
What’s the solution?
Businesses operating in the APAC region have a delicate tightrope to walk. The key to successfully harmonising the requirements of transparency and privacy lies in accessing the right kind of data in a compliant and efficient manner.
This balancing act requires an innovative, technology-enabled approach. AsiaVerify offers a unique solution – best-in-class business verification technology tailored for the APAC region. Our platform is unique in that it offers direct access to authoritative government registry data, empowering businesses to conduct thorough and effective business and beneficial owner checks without compromising data protection standards.
Offering fully translated insights on over 344 million entities and 3 billion related individuals directly from official and compliant sources, AsiaVerify allows businesses to seamlessly meet transparency requirements whilst adhering to data protection compliance.
In closing
In many ways, transparency and privacy are two sides of the same coin. On one hand, firms need transparent and open access to customer and business information, which is essential for compliance and building trust. On the other hand, they need to uphold privacy and data protection standards while accessing that information.
By utilising AsiaVerify, businesses not only meet the stringent demands of ever-evolving AML/CFT regulations but do so in compliance with the privacy and data protection laws governing personal and sensitive information. This is particularly vital in an era where the integrity of data is as crucial as its accessibility.
Discover how AsiaVerify can help your business fulfil your compliance and regulatory requirements, and strategically manage risk as you expand and grow in the Asian market.
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