ASIA

In Asia, financial crime continues to be a pervasive concern, with money laundering being particularly problematic. The UN Office on Drugs and Crime (UNODC) estimated that the annual amount of money laundered globally is approximately 2 to 5% of global GDP, or $800 billion to $2 trillion USD in 2021 (UNODC, 2021). Given Asia’s significant contribution to global GDP, it is reasonable to surmise that a substantial portion of this illicit activity occurs within this continent.

Various incidents of high-level financial crime have underscored the severity of the issue in Asia. For instance, Malaysia’s infamous 1MDB scandal, involving an estimated $4.5 billion USD, is one such case. Furthermore, recent scandals involving the misuse of cryptocurrencies for money laundering have also occurred in countries like South Korea and China, further demonstrating the scale of the problem.

Despite these challenges, governments across Asia have been making strides in combating financial crime and enhancing anti-money laundering (AML) measures. New regulations are being introduced to increase transparency and scrutiny, such as mandatory disclosure of beneficial ownership and tightening controls on cryptocurrency transactions.

In particular, Singapore has demonstrated substantial commitment to fortifying its AML protocols. As reported by the Financial Action Task Force (FATF), Singapore has been commended for its robust AML framework, especially in relation to its preventative measures and aggressive prosecution of financial crime.

China, however, represents a contrasting case. Although the Chinese government has taken steps to strengthen its AML regime, criticisms persist about the effectiveness of these measures. China is reported to have a high level of illicit financial flows, estimated at $139 billion USD in 2020, indicating ongoing challenges in enforcement.

What is happening now?

Over the past two years, financial regulations governing financial crime and AML in Asia have undergone remarkable transformations. In 2022, several nations, including Singapore, Japan, and Hong Kong, refined their regulations to tackle the mounting complexity of financial crimes. The Monetary Authority of Singapore, for instance, adopted a stringent risk- based approach, bolstering their regulatory robustness.

Substantial changes were seen in 2023 with the formation of the Asia- Pacific Financial Crime Consortium (APFCC), bolstering a regional approach to combat financial crimes. This facilitated the sharing of information and best practices, creating a more harmonised regulatory environment.

Into 2024, Asian countries are expected to further tighten their regulations, especially in the digital financial sphere. Blockchain technology is anticipated to play a significant role in these efforts by offering enhanced transaction transparency and traceability. Furthermore, regional cooperation within the FATF is projected to intensify, contributing to the creation of globally harmonised AML standards. This collaborative approach will bolster the region’s standing in the global financial industry.

Conclusion

Financial crime, particularly money laundering, remains a serious concern in Asia, albeit with considerable variation across different countries. Continued commitment to enhancing AML measures, increased regional cooperation, and application of emerging technologies like AI for monitoring transactions are critical to address this issue. Undoubtedly, professionals in the industry must stay abreast of these regulatory changes. 2024 is set to bring about further advancements, steering the region towards a more secure and transparent financial landscape.

AFRICA

Africa continues to grapple with substantial issues related to financial crime, with money laundering being particularly worrisome. According to the United Nations Office on Drugs and Crime (UNODC), the illicit outflow of money from Africa was between $50 and $148 billion USD annually as of 2021. This figure signifies the severity and extent of the money laundering problem.

High-profile incidents of financial crime in Africa have drawn global attention. One such event is the corruption scandal involving Angola’s Isabel dos Santos, where over $2 billion USD is alleged to have been siphoned off from the Angolan economy. In addition, Nigeria continues to grapple with widespread corruption and money laundering, with an estimated $37 billion USD lost to corruption-related activities from 2000 to 2016.

However, it’s not all bleak news. African nations are proactively combating financial crime and enhancing AML protocols. Governments are adopting regulations aimed at increasing transparency and are strengthening their capacities to identify and seize illicit assets. For instance, South Africa has been making significant strides in this area. The country’s Financial Intelligence Centre has been recognised for its robust measures against money laundering, with a strong focus on improving its AML legal framework and enforcement actions.

Conversely, despite improvements, several challenges persist. In Kenya, while the nation has made considerable efforts to improve its AML measures, illicit financial flows estimated at $739 million USD were reported in 2020. This suggests that while progress has been made, there is still a long way to go.

What is happening now?

In 2022, several nations, including Nigeria, Kenya, and South Africa, began enhancing their regulatory frameworks in response to the increasing sophistication of financial crimes. Nigeria, for instance, bolstered its AML controls by tightening regulations on politically exposed persons (PEPs) and enforcing more rigorous Know Your Customer (KYC) checks.

2023 saw the establishment of the African Financial Crime Cooperation (AFCC). This collaborative body has fostered improved information sharing between member states, effectively promoting a harmonised approach to financial crime regulation.

Looking towards 2024, it is anticipated that these nations will refine their digital finance regulations. Mobile money, which has become ubiquitous across the continent, is expected to face more stringent regulatory scrutiny. Furthermore, Africa’s engagement with the FATF is predicted to intensify, aligning the continent more closely with global AML standards. Such proactive steps will undoubtedly bolster Africa’s credibility in the international financial landscape.

Conclusion

In conclusion, while financial crime remains a grave concern across Africa, there are tangible signs of progress in the fight against money laundering. To curb financial crime, African countries need to continue reinforcing their AML measures, foster regional and international cooperation, and leverage technological advancements to identify and halt illicit transactions. African financial services professionals will need to stay updated with these regulatory advancements. 2024 is set to bring about further evolution, leading the continent towards a more transparent and resilient financial environment.