Publications
Partners
Johannesburg – African nations, including the continent’s largest economies of Nigeria and South Africa, can boost international investor sentiment towards their markets by ramping up efforts to combat financial crime such as money laundering, insider trading, terror finance, market abuse and general bribery and corruption.
That was the message from the Anti-Money Laundering Conference hosted by professional services firm, Deloitte, and financial data provider, Thomson Reuters in Johannesburg Wednesday.
“Financial crime is international and will inevitably migrate to countries where the implementation of anti-money laundering regulations is perhaps lagging the rate at which their markets are developing,” said Martin Woods, Global Head of Financial Crime for the Regulated Businesses of Thomson Reuters.
“As the risk of financial crime increases so too does the level of regulatory scrutiny. So it is in the interests of both companies and countries to continually improve their efforts to combat such criminality."
He said at the end of the day, people prefer doing business with businesses and countries that have the proper systems in place to reduce financial risk and ensure that anti-money laundering regulations are not transgressed.”
Woods said it is essential that companies operating in Africa migrate from a rules-based approach to financial risk and compliance, which he describes as "box ticking", towards a risk-based approach that takes a more selective approach towards client risk assessment.
The risk-based approach embraces the know your customer (KYC) guidelines to prevent an organisation from falling foul of money laundering activity.
Marc Anley, risk advisory partner at Deloitte describes the risk-based approach as essentially augmenting a company’s internal rules and compliance processes with an element of common sense towards the assessment of customer risk and the level of scrutiny then applied to that customer
Risk factors to take into account:
Geography
Private companies headquartered in offshore tax havens generally require far more scrutiny than publically-traded companies, which typically undergo far more public scrutiny in their day to day operations.
Inherent customer risk
Companies that hide behind layers of legal and jurisdictional complexity are more likely to be trying to hide something.
Distribution channels
Companies that distribute their goods or services on a face-to-face basis are more likely to be open and transparent than those that do so at arm’s length.
Industry
Companies that distribute high risk products associated with terrorism, bribery and corruption such as arms, may require extra levels of financial scrutiny.
“Financial crime is dynamic and ever-changing so an efficient and effective risk-based approach needs to evolve constantly in order to act as an adequate deterrent,” said Anley.
“Both corporate and government entities need to ensure that they partner with the right strategic partners in order to build an effective deterrent to financial criminality."
He said it’s far more effective if all the necessary stakeholders in a country present a united front against money laundering and financial crime activity than if they try to act entirely on their own.
Woods said one should not underestimate the role of technology and advanced systems that enable intelligent checks for weighing economic, political and criminal risk indicators to enable a country to radically improve its anti-money laundering capabilities.
He said this can result in countries becoming a lot more attractive to international investors.
That was the message from the Anti-Money Laundering Conference hosted by professional services firm, Deloitte, and financial data provider, Thomson Reuters in Johannesburg Wednesday.
“Financial crime is international and will inevitably migrate to countries where the implementation of anti-money laundering regulations is perhaps lagging the rate at which their markets are developing,” said Martin Woods, Global Head of Financial Crime for the Regulated Businesses of Thomson Reuters.
“As the risk of financial crime increases so too does the level of regulatory scrutiny. So it is in the interests of both companies and countries to continually improve their efforts to combat such criminality."
He said at the end of the day, people prefer doing business with businesses and countries that have the proper systems in place to reduce financial risk and ensure that anti-money laundering regulations are not transgressed.”
Woods said it is essential that companies operating in Africa migrate from a rules-based approach to financial risk and compliance, which he describes as "box ticking", towards a risk-based approach that takes a more selective approach towards client risk assessment.
The risk-based approach embraces the know your customer (KYC) guidelines to prevent an organisation from falling foul of money laundering activity.
Marc Anley, risk advisory partner at Deloitte describes the risk-based approach as essentially augmenting a company’s internal rules and compliance processes with an element of common sense towards the assessment of customer risk and the level of scrutiny then applied to that customer
Risk factors to take into account:
Geography
Private companies headquartered in offshore tax havens generally require far more scrutiny than publically-traded companies, which typically undergo far more public scrutiny in their day to day operations.
Inherent customer risk
Companies that hide behind layers of legal and jurisdictional complexity are more likely to be trying to hide something.
Distribution channels
Companies that distribute their goods or services on a face-to-face basis are more likely to be open and transparent than those that do so at arm’s length.
Industry
Companies that distribute high risk products associated with terrorism, bribery and corruption such as arms, may require extra levels of financial scrutiny.
“Financial crime is dynamic and ever-changing so an efficient and effective risk-based approach needs to evolve constantly in order to act as an adequate deterrent,” said Anley.
“Both corporate and government entities need to ensure that they partner with the right strategic partners in order to build an effective deterrent to financial criminality."
He said it’s far more effective if all the necessary stakeholders in a country present a united front against money laundering and financial crime activity than if they try to act entirely on their own.
Woods said one should not underestimate the role of technology and advanced systems that enable intelligent checks for weighing economic, political and criminal risk indicators to enable a country to radically improve its anti-money laundering capabilities.
He said this can result in countries becoming a lot more attractive to international investors.
