Chris Fordham, Managing Director of Disputes and Investigations Asia explains what new risks are emerging in Asia, how they can be identified and strategies to deal with them in this video documentary with TEH Group.

Strategies to Mitigate New Risks

Companies need to keep up with new risks, KYC measures and ensure monitoring frameworks are kept up to date with robust on-boarding procedures. “Of course, not everything works all the time and there can be errors within the system. Criminals are smart and know what weaknesses to target and work out how to get around the systems. That is why systems need to continually evolve” said Chris.

The key is to ensure compliance frameworks are in place first. Then as “new risks develop, whether through entering new products, markets, operations or other types change, the framework needs to be updated to deal with these new risks. This is clearly a phenomenal effort” he said.

Take cryptocurrency, online payments and banking for instance. “Now it is possible to open a bank account without going in person to the bank and being eye balled. This creates new risks and companies need to plug in new additional polices to the existing compliance framework” said Chris.

A significant emerging risk affecting Asia is trafficking which is usually very profitable with minimal costs. “One of the key things with trafficking is that all the money gets laundered through banks or has to go through financial institutions (FI) at some point, leading to problems of money laundering. This new risk means that the signs these FIs should look out for are evolving and different from other risks” said Chris.

Entering Emerging Markets will bring New Risks

Transparency International identified emerging markets and countries as being at higher risk of bribery and corruption. When companies are establishing new businesses in these markets, they need to be aware of this. For example, when they need to obtain licenses or permission to develop land this brings them into touch points with organisations or government bodies that may involve high risks of bribery and corruption. “It is never the solution to think this is just the cost of doing business, this type of thinking is never going to work” said Chris.

There is increasing regulatory scrutiny and enforcement not just from the US, UK and Europe but also increasingly within Asia.  Companies are going to run into problems with regulators if they do not make efforts to mitigate emerging risks.