London
25 April 2017
Reporter: Stephanie Palmer

Geopolitics causing confusion in financial crime compliance


The Trump administration’s approach to regulation is a concern when it comes to financial crime compliance, but experts speaking at the SWIFT Business Forum suggested that attendees may have bigger fish to fry.

In a session on the evolving geopolitical landscape, the audience of financial services professionals were asked for their biggest concern.

The most popular concern was the effect of the US and President Donald Trump’s approach to regulation and deregulation, highlighted by 34 percent.

This was followed by the Middle East conflict and issues around Syria, Iraq and North Africa, selected by 19 percent of the audience, and the UK’s exit from the EU, named by 13 percent.

Issues around weapons of mass destruction—specifically in North Korea and Iran—and “Eastern front tension”, that is the situation with Russia in Crimea and the threat of Russian hacking, were each named by 11 percent of respondents.

China’s search for “predominance in Asia” was considered the biggest geopolitical concern by 9 percent of the audience.

Jennifer Shasky Calvery, global head of financial crime threat mitigation at HSBC, said she doesn’t see the US as a big issue at the moment.

Currently, the US government is committed to using sanctions and anti-money laundering as a means to political leverage, she said.

Rather, Shasky Calvery drew attention to the conflict in the Middle East, suggesting that this creates new know-your-client challenges with regards to looking out for the possibility of clients becoming radicalised.

She also noted that, for HSBC specifically, which has huge operations in the US and Asia, a difficult relationship between the US and North Korea “starts to raise some pretty complex questions” around financial crime responsibilities.

From a European perspective, Olivier Kraft, a research fellow at the Centre for Financial Crime and Security Studies of the Royal United Services Institute, said that, despite the Brexit negotiations, there is a “strong political will” among the “divorce partners”, to limit any negative impact on the fight against financial crime.

Kraft also suggested that good will in this respect is not enough, and questioned whether it will possible for the UK to maintain its current level of cooperation. There are likely to be legal challenges in this, he said.

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