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China's banks ramp up compliance as global push hits snags

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* Top 4 China banks add 71 offices to global network since
2012

* Expansion exposes weakness in banks’ risk, compliance
systems

* Banks subject to probes in Europe, ordered to improve in
U.S.

* Banks up compliance budget in 2016, half by 20% or more
-survey

* Still shortcomings in expertise, technology, culture

By Matthew Miller and Shu Zhang

BEIJING, June 1 China’s biggest banks are
beefing up their risk management and compliance programmes,
following a series of high-profile judicial investigations and
regulatory probes in the United States and Europe.

These legal and regulatory headaches are likely to be a drag
on their aggressive overseas expansion until suitable anti
money-laundering (AML) and know-your-customer (KYC) controls are
in place, bankers and compliance experts say, but they are
taking action.

A survey by LexisNexis Risk Solutions, which provides
compliance services to China’s big state-owned commercial banks
and smaller financial services companies, showed that about half
expect to increase their compliance budgets by 20 percent or
more this year, and the rest will raise it by a lesser amount.

“Chinese banks are going through a learning curve,” said
Ellen Zimiles, Global Head of Investigations and Compliance at
Navigant Consulting in New York. “They’re going to have to come
up to standards if they’re going to have branches in the United
States and Europe.”

China’s top four banks, which together control $700 billion
of overseas assets, have added more than 70…



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