De-risking in today’s world has been perceived as a repercussion of regulatory acquisitiveness and an avoidance factor for futuristic enforcement trails.
There is a hue and cry from supranational bodies to various international banking giants to have a pragmatic approach towards the un-banked and to avoid wholesale de-risking.
A resilient and unassailable strategy will need to be established by financial institutions, and banks in particular and demonstrate to the regulators with more details as to why a specific customer is being black listed internally, rather than de-risking the sector itself.
Precious metals, gems and jewelry businesses particularly are facing the brunt as due diligence measures can not be conducted as effectively as against other sector products, due to the nature of technical complexity.
As regards to conduct risk it has become the matter of contention, particularly with foreign exchange and lib-or related scandal incidents. Regulators have been pitching the direct relevance of conflict of interest with conduct risk. That being said, it is more so important for banks to put customers interest at the forefront than their own.
Having said that, these aspects do have a direct bearing on compliance and anti money laundering practices, including that of customer on-boarding to understand various nuances of conflicts.
Asian countries, particularly Hong Kong and Singapore are under severe pressure to meet various expectations from regulators over KYCC standards and their maintenance.
Therefore, for organizations and compliance managers more than to do the right thing, the duty of responsibility will take precedence.
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