GRC Professional - February 2015 Edition

FINANCIAL CRIMES Edition Eight February 2015 Sanctions compliance NZ banks struggle with remitters The new normal. Page 14 Page 16 Fighting organised crime Page 27 China flexes regulatory muscles US chipmaker Qualcomm will pay US $975m to Chinese authorities to end a 14-month anti-trust investigation into its patent licensing practices. There have been a series of high-profile anti-trust investigations in China announced in recent months, and reports indicate there may be more on the way. Increasingly, China is enforcing its anti-monopoly law, first introduced back in 2008. Chinese regulators have investigated more anti-trust cases in the last 18 months than in the previous four years combined. In 2013, there were fines against a Japanese and Korean LCD cartel (Rmb353m), six international baby-formula producers (Rmb668.73m) and two Chinese white spirit producers (Rmb469m). The Qualcomm fine is the largest in China’s corporate history and will require the firm to lower royalty rates on patents used in China’s mobile phone market. It has been claimed that the move could help Chinese smartphone makers Xiaomi and Huawei. Qualcomm said on Monday that it would not contest the ruling. “Although Qualc omm is disappointed with the results of the investigation, it is pleased that the NDRC (National De- Singapore increases corruption oversight The Singapore Government is strengthening the Corrupt Practices Investigation Bureau (CPIB) to stamp out corruption. The changes were announced by the Prime Minister, Lee Hsien Loong, in January. “We must maintain our zero tolerance for corruption, regardless of the rank and seniority of the officers involved,” Lee Hsien Loong said. velopment and Reform Commission) has reviewed and approved the company’s rectification plan,” Qualcomm said, in a statement. The chip giant made about half its global revenue of $26.5bn in China in its last fiscal year, and it is the biggest supplier of chips used in smartphones, globally. The firm will now charge royalties based on 65% of the selling price of phones in China, instead of on the entire price. The regulator has also investigated Microsoft for anti-trust violations because of the compatibility of its Windows operating system and Office software. According to a state media report, Microsoft’s use of verification codes also spurred complaints from Chinese companies. Their use, “may have violated China’s anti-monopoly law,” the official Xinhua news agency said last year. In 2014, the regulator fined Audi, Chrysler and multiple Japanese car companies. “We must never let corruption take hold here. Once it takes root, it is difficult to weed out.” The CPIB has, “served us well over the years,” by keeping Singapore clean and by preserving its reputation abroad, Lee said. To strengthen CPIB further, the Government is reviewing the Prevention of Corruption Act, and will increase the agency’s manpower – currently under 200 people – by more than 20 per cent. The agency also said it is building up its operational capabilities and collaborations with its international counterparts. More AML inspections in Hong Kong Thomson Reuters has reported that Hong Kong’s financial institutions should expect more focussed, on-site assessments of their anti-money laundering, know-your-customer and counter-terrorist financing controls by both the banking and securities regulators this year. The report quoted industry officials and also said more actions are also expected to be brought under the city’s Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (AMLO), which has been in operation since April 2012. Financial institutions can expect more regular periodic, on-site inspections from the Hong Kong Monetary Authority and Securities and Futures Commission, and that these inspections will be more thematic in nature. 13

GRC Professional - February 2015 Edition | Page 15