PwC's Managing upstream risk: Regulatory reform review - An asian perspective November 2013 | Page 8

2.2 AML and Financial Crime

Update

On 7 November 2013 the OECD published the
second edition of Effective Inter-Agency Cooperation in Fighting Tax Crimes and Other
Financial Crimes describes the current position
in 48 countries with respect to the law and
practice of domestic inter-agency co-operation
in fighting tax crimes and other financial crimes.
It outlines the roles of agencies in different
countries, legal gateways to enable these
agencies to share information and other models
for co-operation, such as joint investigations
and the establishment of intelligence centres
including officials from different authorities.

On the same day OECD also released a new
bribery and corruption awareness handbook
to raise the awareness of tax examiners and
auditors of issues concerning bribery and other
forms of corruption and provide guidance on
how to recognise indicators of possible bribery
or corruption in the course of regular tax
examinations and audits.

It has been reported that banks need to pay
closer attention to AML controls in companies
they’re acquiring to ensure the lenders don’t
inherit Bank Secrecy Act risks. Comptroller
of the Currency, Thomas Curry, said “some
institutions have inherited significant BSA
problems from the acquired institution, so it’s
vital that due diligence in an acquisition go
beyond credit portfolios to include a look at
the target institution’s BSA program.” Curry,
who said his agency has had to make moneylaundering protections a focus, fined Londonbased HSBC Holdings Plc $500 million last
year, a record penalty from a bank regulator, he
has said. The Office of the Comptroller of the
Currency often discovers “insufficient staffing,
high turnover rates, and cutbacks in spending
on compliance” that he said are “unacceptable”
management breaches.

2.3 Credit Ratings

Update

The Joint Committee of the ESAs (EBA, ESMA
and EIOPA) launched on 7 November 2013 a
one-month public consultation on the removal
of mechanistic references to credit ratings in
their guidelines and on the definition of sole
and mechanistic reliance on such ratings. In
order to have a common approach towards this
issue, the ESAs developed a definition of “sole
and mechanistic reliance”, and are consulting
with market participants on whether this
definition is clear and can be used in practice.
The paper contains in summary:
• A proposed definition for “sole or
mechanistic reliance”, including examples;
• he provisions in the three ESAs’ guidelines
T
that are not to be defined as mechanistic;
and
• Those provisions that are to be considered
as mechanistic and therefore should be
amended.

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