Thomson Reuters Releases 2nd MENA Financial Crime Report at 10th GCC Regulators Summit 2016

Abu Dhabi – MENA Herald: Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, today released the 2nd Middle East and North Africa (MENA) Financial Crime Report in collaboration with Deloitte at 10th GCC Regulators Summit.

According to the findings, about 50 % of respondents have significantly increased their compliance spending over the last two years and 52 % expect a significant increase in compliance spending in the next two years. More than 39% prioritize business change and reorganization investment over technology and training. Only 7% have complete confidence in their compliance policies, while 44 % fear over-reliance on Technology.

Around 14 % of respondents are confident that technology is appropriately applied, while two thirds do not have a cyber security or technology policy in place. In respect to sanctions policy, more than 40 % of respondents confirmed that they do not have a sanctions policy in place.

Nadim Najjar, Managing Director, MENA, Thomson Reuters, said: “From the responses, we identified five key themes including tone at the top of corporations, increasing investment in sophisticated technology solutions, reorganizing processes, decrease in confidence programs and stalled policies.”

He noted: “While it is encouraging to see MENA organizations moving forward in attempt to align themselves with international best practice, from the responses to the survey, it appears that a full understanding of the requirements of tone from the top is not yet realized, and more needs to be done to translate this concept into practice. It requires careful management of relationships with those in senior executive positions, as well as good communication throughout the organization. With the overwhelming amount of regulatory updates and the stepping up of global
enforcement activity, gaining the support at every level of the organizational hierarchy will become crucially important for compliance success.”

“If the speed and volume of regulatory change is causing some anxiety amongst respondents, it is understandable. In 2008, there were 8,704 regulatory alerts – in 2015, that figure has jumped dramatically to over 43,000 alerts, or one every 12 minutes. It is no surprise, therefore, that while last year the most pressing concern was maintaining training and awareness, followed by securing support from management and the increasing costs, this year’s top concern is coping with regulatory updates,” Mr. Najjar added.

He pointed out that the report confirms that there is an emphasis on investing in new processes rather than training or communication between leadership and employees, both essential factors in creating a proper tone at the top. There is a real need to increase communication between management and staff in order to raise awareness is seen as the highest priority over the next two years.

Mr. Najjar added: “We expect to see a difference in approach to governance in the near future. We know that with the increased focus on personal liability for senior officers there is likely to be a shift in the emphasis of good governance and executive accountability.”

Humphry Hatton, CEO, Deloitte Corporate Finance Limited, (regulated by the Dubai Financial Services Authority), said: “This year’s follow up to the benchmark study on financial crime in the region lays bare the major gap that currently exists between the current state of financial crime compliance and where it needs to be. There is clearly no cause for complacency when only 7% of respondents say they have complete confidence in their compliance policies and only 14% are confident that their technology is appropriately applied.”

“Equally concerning is that two-thirds of respondents say they do not have a cyber security or technology policy, given the growing risks in this area. This report therefore supports the view that significant further investment in financial crime compliance is required in the region in areas such as technology, training and skills,” he added.

Osman Sultan, Chief Executive Officer, Du, said: “The world has never stopped changing and now we are moving to the digital and the fourth revolution phase. New business players are creating new business models and digital disruption is forcing players to reinvent their business models. Users are becoming the creators of the content. New ecosystems mean new conversations and new regulations. Today, regulators should have the right balance between intellectual copy right and the digital advancement.”

Phil Cotter, Managing Director, Risk, Thomson Reuters, said: “In our special report The State of Regulatory Reform 2016, we highlighted that the focus for the coming year for regulators globally would be on strengthening Anti Money Laundering & Know Your Customer regulations, personal responsibility for senior managers, cybercrime, and the rise of FinTech.”

“These are just some of the challenges that both regulators and financial services organizations will face over the coming 12 months. This coupled with the continuing extra –territorial scope of regulations such as the new EU Data Protection Directive will place an increasing burden on regulators and financial organizations to keep pace with the rate of change and to ensure that their systems, processes and people are up to the task of remaining compliant,” he added.

Mr. Cotter pointed out that developing markets and international trading centers present a further challenge as they attempt to balance the demands of global & local regulations with the need to grow their local economies.

Speaking at the opening session on leadership responsibility, Lubna Qassim, Executive Vice President, Group Company Secretary and General Counsel, Emirates NBD (PJSC), pointed out that the responsibility of the risk assessment should span across the organization. She added that it is important that we draw a distinction between governance and management.

“Board directors are extremely frustrated because they are spending time beyond financial result and running the business. Compliance occupies a significant time of the board and they are now more aware about what is happening in the marketplace since 2008. An effective board is smart, educated and profoundly aware of the economic and geopolitical scene,” she added.

Shahzad Khan, Group Head of Corporate Governance & Compliance, Mubadala, said: “We have grown liberal with how governance is applied. I believe that diversity is critical to board effectiveness in addition to proper training and induction. Furthermore, we need more international directors to challenge the thinking and provide the disruptive technologies across regional markets.”

“Effective agenda planning is important throughout the year and we definitely need to see more efforts by companies on effective management of succession planning,” he added.

Imelda Dunlop, Executive Director, Pearl Initiative, said: “Around 27 percent of business managers believe that compliance officers are empowered. The Pearl Initiative is launching the integrity indicator and we would like to find new ways to address a wide range of issue on good governance. The vast majority of countries are family firms and we think that it is important that they start looking at best practice in governance.”

2016-11-08T20:54:24+00:00 Tuesday 26, January 2016|Categories: Services, Slider, United Arab Emirates|Tags: , |