Spotlight on APAC: How agile compliance drives competitive advantage 

Businesses across APAC today face a complex and ever-evolving risk landscape, characterised by shifting geopolitical tensions, economic uncertainty and an evolving global regulatory curve. Alongside this, rapid advancements in technology are enabling rising levels of fraud and threat actors are growing in sophistication. 

• These shifts in the risk landscape are structural and will require businesses to navigate these challenging times cautiously, while at the same time not losing sight of the need to refine and tighten their due diligence efforts on third parties.
• Compliance and legal professionals can embrace agility and take on proactive roles in strategic business decisions.
• Using a six-step action plan, teams can meet compliance obligations in times of uncertainty.

Against this backdrop, our customers in APAC are facing ferocious headwinds as investors, shareholders continue to have a strong focus on growth. In addition, regulations continue to dynamically evolve coupled with increased oversight and regulatory action.  By way of example, the Monetary Authority of Singapore (MAS) taking regulatory action for AML related breaches against 9 financial institutions and persons of interest (POIs).  See MAS Takes Regulatory Actions against 9 Financial Institutions for AML-Related Breaches

In addition, we are also seeing an increase in regulatory and trade fragmentation as countries and businesses revisit their trade relationships and policy frameworks to enhance resilience. APAC customers, especially those with international exposure, are no exception and are increasingly reassessing their business and operational structure. This is driving a focus on trade compliance across the value chain particularly in technology, AI, semiconductors, biotech, and the critical minerals sectors.

With businesses diversifying trade relationships, developing new products, re-shoring production and entering new markets; Legal, risk and compliance professionals who can speak the business language and can navigate through emerging risks will set themselves apart.  A deep and comprehensive understanding of the organisation's "trade flow” will enable them to:

• Provide valuable input into developing new products and solutions.
• Proactively evaluate current suppliers and possibly shift supply chains and/or reshore production.
• Suggest and enter new markets by onboarding new partnerships.
• Work with finance teams to verify identities and account verification prior to any transaction.

Third parties play a fundamental role in most businesses today – from suppliers to agents, to re-sellers and more. Third parties add substantial value to the bottom-line but can also introduce new risks.

It is therefore imperative that businesses conduct robust due diligence on all third parties – not just at the onboarding stage, but throughout the lifecycle. This demand for dynamic oversight means that risk and compliance teams are working with the business to increasingly identify any potential new risks, spot gaps and close loopholes as they sign business deals. 

A six-step action plan can be a useful framework for corporate organisations to meet their compliance obligations while adapting through periods of uncertainty. Such steps generally include:

• Onboarding

At the onboarding stage, it is crucial to identify every third party. It is also an ideal time to refresh questionnaires so that they are designed with questions that can be verified, written free from legalese and are scored.

• Automated Screening

Focus on the first line of defence.  Beyond access to a risk intelligence subscription database that covers global PEP, sanctions, law enforcement and negative media profiles; consider the ability to on a “need to know” basis identify bank accounts and IDs?

With cost under severe scrutiny, this is not the time to be asking for more resources.  Organisations should think about how to integrate (as much as possible) reliable data into customer, supplier and finance ERP technology systems to screen and monitor third parties faster.

• Risk Ranking

Many firms rank their third parties according to risk factors which help them to identify higher risk relationships.  Since sales and channel teams are in a race to bring in more topline revenue, this is an opportunity to recalibrate the firm’s risk methodology to reassess the new risks with new business goals and constraints.

• Enhanced Due Diligence (EDD)

EDD is often misunderstood as the costliest control.  But the potential fines and/or penalties and reputational damage will be costlier.  If a risk-based approach is in place, the scope of work will correlate to the risk tiers so that cost is appropriately justified.  

• Ongoing Monitoring

Often an overlooked control - ongoing monitoring is especially essential since new risks can emerge at any time. Ongoing monitoring can be externalised to a trusted vendor. This will allow for scarce and valuable resources to be rediverted to higher value work.  

• Test, Audit, Document 

Controls that are often ignored until there is a lapse. If the approach to compliance obligations change, documentation is key to provide regulator with proof of action and comprehensive internal control.  

Uncertainty in today’s global landscape isn’t a temporary disruption – it is a lasting structural shift.    Regulators are making clear that they expect clear actions based on comprehensive framework, policies and tools. As scrutiny intensifies, the most successful organisations will be those that have solid foundations and agile compliance strategies, able to scale with trusted partners and make timely, confident decisions.