07 April 2022

Financial Crimes Compliance – Old Chestnuts, New and Innovative Approaches

Compliance, Risk & Governance

In the 21^st century, 96 material fines (> US$10 m) for financial crime offences (AML & Sanctions) were levied across 17 countries amounting to US$38.5 bio, or an annual average of US$1.77 bio. (Source: Financial Crime News)

Financial crime has real impact on society, populations and economies. The underlying offences relate to drug trafficking, prostitution, human trafficking, modern slavery, tax evasion, fraud, bribery, corruption and also environmental offences. Although visible enforcement action is one regulatory tool, a sobering question remains: Are fines and penalties effective in decreasing risk?

This is a particularly fraught point in a digital age where new innovative ways to commit crimes faster and more efficiently emerge. This is followed by disguise of the perpetrators and proceeds in novel manners. The spectre also looms of jailing senior bankers and imposing vicarious criminal liability for acts and omissions of others under one’s supervision.

The industry encounters difficult questions. Does full regulatory compliance co-exist with effectiveness? What does a risk-based approach with adequate controls really mean in practice? Should firms be recognised for what they have found, as well as what they have missed? The challenge is increasingly daunting as the business environment changes in a digital age, and perpetrators are ingenious in modifying their tactics. We are familiar with using carrots, not just sticks as an approach if we want to achieve desired outcomes. How do we prioritise measures to be put in place in a resource constrained environment, and how would such measures be assessed in practice?

In WMI’s session on Financial Crime Regulation led by Ms Mabel Ha, Senior AML/CFT Advisor APAC with Julius Baer and with a wealth of experience as head of Financial Crime Compliance for APAC with UBS and Deutsche Bank, there were a range of highly relevant issues covered. Key Singapore and international regulations on financial crime spanning anti money laundering, sanctions, anti-bribery and corruption and fraud, including the roles and responsibilities of a compliance officer in relation to these were addressed.

Participants from a cross-section of the financial services industry exchanged views on their top challenges as a financial crime compliance officer. A common challenge is keeping up with the evolving landscape and Mabel covered new Payments Services regulations, and regulator and industry perspectives on the use of new technologies, data analytics, and public and private partnership information sharing. Insights into challenges in the broader financial sector and newer business models were discussed.

As finance knows no borders, clients, booking centres and money transfers may reside and originate in any part of the world in an increasingly interconnected financial system. The session addressed relevant papers issued by, among others, the Financial Action Task Force, Monetary Authority of Singapore and Hong Kong Monetary Authority on regulatory expectations. The discussion also identified the inherent risks in such business models, requirements and risk mitigation measures for the types of digital assets and cryptocurrencies. For the latter, the practical challenges of complying with requirements such as the “Travel rule” remains. For these, how should industry players trade, custodise, monitor and detect suspicious patterns for such classes of instruments and assets?

Applying sensible requirements designed for earlier business models and technologies to the new classes of assets and modes of money transfer require ingenuity, innovative approaches, and application of growth mindsets to traditional challenges. There were also discussions about the existence of the Darknet Market or Russian Bazaar Hydra, and use of tools and products to increase the anonymity of virtual assets transactions (including tumblers, mixers, privacy coins). This occurred within a highly interactive session featuring guest speaker Tan Wee Soon, Head of Compliance of Julius Baer Singapore who added heft and deep practical experience also from his past Money Laundering Reporting Office roles in DBS and Deutsche Bank. Participants found it illuminating to hear from speakers who were forthcoming in sharing their vast experience and specifically, their concerns and views on managing emerging risks with digital assets.

Mabel recapped her experience: “A sound understanding and solid grasp of the regulatory framework is necessary for a compliance officer to implement and facilitate his/her organisation’s compliance with such rules. In this session, we aimed to equip the attendees with a better understanding of why we need to do what we do, how we should support management accountability, how requirements and business models are changing – including in response to international trends – and how controls will need to be nimble to address emerging risks. I hope the group enjoyed the quizzes and case studies and I’m also grateful for the strong interaction and openness to learning from one another.”

A country’s objective, now with the help of industry and national government partnership, is to encounter less crime, financial or otherwise. There is no single answer to whether fines and enforcement or personal accountability fully address reducing financial crime. Large eye-catching fines which cut into profits, laden bad reputation to an individual, and thus affect ability to work in the sector are certainly deterrents. However, an understanding of the underlying risks, ways in which money flows move and work, tracing through to the ultimate criminal actors and arresting these vectors, knowledge of what and where such risks lie, how to use tools available and critical controls, must be in place. Financial bodies need to be sound and well-managed institutions. We took steps towards getting there in this insightful, forward looking, practice based, interactive session where ideas were exchanged, several hard questions raised, and status quo challenged.

This is a professional education in the 21^st century.

This article was written by Ms Sharon Craggs, Senior Teaching Fellow and Director, Programme Development (Compliance) at WMI.

“Financial Crime Regulation” is a module under WMI’s Graduate Diploma in Compliance in Financial Services, a programme that equips compliance professionals with skills and expertise in established and cutting-edge compliance disciplines and prepares them for broader leadership roles in Compliance risk management.

Learn more about WMI’s Graduate Diploma in Compliance in Financial Services

Environmental, Social, Governance (ESG)

3 Reasons Why Private Bankers Should Learn About ESG

Programme Overview

3 Reasons Why Private Bankers Should Learn About ESG

The financial sector is experiencing significant shifts in a critical area—sustainability—alongside ongoing technological transformations. Traditionally, financial strategies have focused predominantly on maximising returns; however, a growing awareness of their environmental impact is giving rise to a new paradigm—one that today’s professionals may find challenging to navigate.

As more investors and institutions prioritise sustainability in their financial decision-making, recognising the long-term benefits it offers, the trend driven by the Environmental, Social, and Governance (ESG) framework is fundamentally reshaping our approach to wealth creation and responsible stewardship.

Mervyn Tang, who is Schroders’ Head of Sustainability, APAC, highlights three compelling reasons why private bankers should enhance their understanding of ESG to better serve their clients and future-proof their careers.

ESG: A Global Imperative Reshaping Investments

What was once a secondary consideration has now become a global imperative. The response to ESG issues, particularly climate change, is transforming how economies operate. “Governments around the world are putting policies to battle issues like climate change,” Mervyn says. “It’s changing the business models (and) the way our economy operates.”

As organisations navigate new regulations and seek incentives, such as those for electric vehicles, they must strike a balance between upfront costs and long-term objectives—ensuring their capital investments deliver sustainable returns over time.

Already, economies covering 90% of global GDP have set net zero targets, and over half of the world’s largest companies are aligning themselves with this vision. The results so far have been encouraging, with market research platform Gitnux reporting in 2024 that companies with strong ESG credentials have seen a 3-5% increase in annual revenue growth. Those with high ESG ratings also consistently outperform competitors who neglect them.

This shift creates a new role for private bankers. They’ll need to understand how these policies affect different industries, determine which are the reliable markers to prove sustainability, and how to position client portfolios for a sustainable future.

“Private bankers would be expected to talk about changes in sustainability and ESG policy in the same way as they are meant to talk about energy price inflation or Fed interest rates,” he surmises. “You’ll be expected to know more about ESG in the future.”

The senior professional explains how these fundamental concepts are discussed in WMI’s Certificate in Introduction to Climate Change and Decarbonisation Strategies programme. Besides gaining a broad perspective on topics such as climate science and international agreements in order to understand the global push for sustainability, the curriculum also includes training in core skills to assess and advise on green products and initiatives.

With outlets like Bloomberg indicating that the world’s ESG assets are projected to hit $40 trillion by 2030, informed finance professionals will stand out with their enriched knowledge and become invaluable assets to their clients’ evolving investment journey.

A Growing Emphasis Across Generations

The rise of ESG investing is not just shaped by policies. It is being fuelled by increasing demand from individuals, particularly younger generations.

“The general public is caring more about ESG,” Mervyn reveals. “You see this in search trends for things like sustainable investing and climate change.”

Figures from PricewaterhouseCoopers substantiate this observation, with a report citing that a whopping 83% of consumers expect companies to actively shape their ESG best practices, and that 76% would discontinue relations with companies which mistreat employees, communities and the environment.

“This is particularly apparent for younger generations like Gen Z or the millennials,” Mervyn notes.

A Stanford University study supports this, revealing that while only 30% of boomers were invested in ESG issues when it comes to their investments, this grew to 60% with Gen X, and became a pronounced 80% with Gen Zs and millennials.

“If these generations are more interested in sustainable investing, as we see the intergenerational transfer of wealth, more and more of your clients may want to talk about ESG in the future,” he predicts.

As ESG considerations grow increasingly complex, effective ESG investing requires integrating all three pillars—environmental, social, and governance—into the decision-making process. Beyond environmental factors, social considerations evaluate a company’s labour practices, diversity and inclusion policies, and its impact on the communities in which it operates. Governance focuses on leadership quality, transparency, and risk management practices.

WMI’s programme provides advanced modules that delve into these areas, equipping professionals with the skills to assess the right metrics and deliver comprehensive reports that support informed discussions on sustainability. By considering all three pillars of ESG alongside traditional financial analysis, private bankers can help investors capture an organisation’s long-term potential.

A Sustainable Future Unlocks New Investment Opportunities

In response to this accelerating trend, the financial sector is embracing the increasing demand for sustainable investment options.

“Sustainable investing options are increasing,” notes Mervyn, referencing both market trends and insights from his work at Schroders. “We’re talking about equities, fixed income, private assets. There’s a lot of things that your end retail investor can invest in to achieve their sustainability objectives and their financial objectives.”

The same report by Github reflects this sentiment in Asia, where 60% of retail investors have shown particular interest in ESF-focused funds, and that with the exception of Japan, allocation to ESG investing is expected to surge over 20% in Asia over the next five years.

Furthermore, the rise of digitalisation is democratising access to sustainable investments. Platforms such as crowdfunding now enable individuals to invest directly in emerging opportunities like green bonds and carbon offset initiatives—areas once limited to large institutional investors.

Rather than viewing this as competition, Mervyn emphasises that these developments highlight the need for complementary expertise. Informed private bankers can leverage their knowledge and these new tools to enhance their client offerings.

“More products means more options for your end clients to deliver what they need,” he says. “This is partly one of the reasons why asset managers are building up their sustainable investment product ranges. We see funds evolving from just your general sustainable funds to lots of different themes, to even direct private assets investing in things like renewable infrastructure.”

There’s more and more investment options for you to help cater to your clients’ financial objectives as well as sustainability objectives,” he adds.

Conclusion

The integration of ESG considerations into financial strategies is no longer a niche movement but a crucial complement to traditional finance. As private bankers navigate an evolving landscape, a solid understanding of ESG frameworks, reporting, and products becomes a vital tool for building resilient portfolios, managing risks, and fostering a more sustainable future.

WMI’s ESG programmes embrace this shift, offering a practical and industry-relevant syllabus designed by leading experts. Through engagements with senior professionals like Mervyn, participants gain real-world insights and case studies, equipping them to apply their knowledge effectively post-graduation—for the benefit of their organisation, clients, and the planet.

Learn more about WMI’s ESG Programmes