The document discusses the challenges that asset managers face with know-your-customer (KYC) and anti-money laundering (AML) regulations. It notes that compliance costs have increased, onboarding times have lengthened, and it is difficult to keep large amounts of client data up-to-date. A centralized solution that collects, verifies, and monitors client data could significantly reduce costs for both clients and asset managers by streamlining the onboarding process. The article advocates for standardizing KYC/AML policies across the industry and adopting a centralized model to improve efficiencies and the customer experience.

1. 36 GRC Professional • December 2016
financial
crime
small firms can find the cost of setting up a
compliance department prohibitively expensive.
Looking ahead, the trend is clear – the regulatory
burden is only going to increase over time. This
means that the resources (both human and
financial) required to collect, verify and maintain
KYC and AML records will continue to increase.
Furthermore, the risk based approach (RBA) further
complicates the landscape, because each financial
institution interprets regulatory policy through their
own organisational lens, leading to non-standardised
KYC and AML procedures.
As regulators cast the net ever-wider, it will
become increasingly complex to operate across
jurisdictions. This is especially true for heavy-
documentation markets trading derivatives,
structured products and non-exchange over- X
KYC and AML in the
APAC region:
An innovative
solution to deep-
rooted challenges
Jeff Plein, Chief Operating Officer of Fullerton Fund
Management, discusses the challenges that know your customer
(KYC) and anti-money laundering (AML) legislation have
introduced into the asset management industry, as well as
solutions on the horizon.
“The industry
as a whole is
grappling with
increased
KYC and AML
requirements,
although
different firms
face different
challenges.”
KYC and AML regulations are becoming
increasingly onerous for asset managers and our
challenges are no different in that regard. We have
seen our on-boarding and systems costs increase, and
on-boarding times have also lengthened.
In addition to new customer on-boarding,
we need to ensure that existing customer data
is always up-to-date. For example in Singapore,
fund managers are required to identify and screen
mandated officials, the number of which can run into
the thousands in some larger organisations. It is a
major undertaking.
The industry as a whole is grappling with
increased KYC and AML requirements, although
different firms face different challenges. Global
asset managers have to take cognisance of global
regulations, while at the other end of the spectrum,
Jeff Plein, COO fullerton fund
Management

2. 37
financial
crime
The challenges with existing KYC and AML
client on-boarding processes do not end there.
The industry suffers from predominantly
manual KYC and AML workflows, where audit
trails are paper-based and not digitised. Manual
workflows between teams may also result in
inadvertent slippages of controls. Other areas
of concerns include keeping track of the expiry
of information, as well as managing voluminous
anti-money laundering screenings.
It is also time consuming and not cost
efficient for firms to search for information from
independent public sources. In addition, un-
harmonised global KYC and AML rules across
multiple jurisdictions create tension with clients
who are fatigued by multiple requests from
various financial institutions.
So what is the solution? To help tackle
these challenges, Fullerton recently selected
Thomson Reuters Org ID, which will further
help Fullerton follow best practices and remain
up-to-date with KYC and AML regulations in
Singapore, APAC and globally. From
the-counter (OTC) instruments, where marrying up
the KYC and AML requirements with IMAs becomes
more challenging by the day. One of the more
immediate challenges relates to dated regulations,
such as the pre-digitization requirement for hard copy,
certified copies of documents.
From the client’s perspective, they also face a
variety of challenges, including inconsistencies in
data and documentation requests. These are a direct
result of different interpretations of regulations.
When coupled with disparate remediation cycles
and additional ad-hoc requests, it can be frustrating
for clients. If a client has multiple relationships,
and each one interprets legislation differently, the
administrative burden can become significant. The
end result is longer on-boarding times, increased costs
for both the client and the asset manager, and delays in
launching mandates.
There is also growing concern about how sensitive
client data is being consumed and stored. With
identity theft on the rise, clients rightly want to know
who is accessing their data and what is being done to
protect it.
“There is also
growing concern
about how
sensitive client
data is being
consumed
and stored.”
X

3. 38 GRC Professional • December 2016
financial
crime
industry and our clients face: the ‘hassle tax’ involved
in dealing with KYC and AML documentation-
related requests. If we can remove this tax and
save our clients time and money in responding to
KYC requests, whilst ensuring that their private
information is kept safe, then we will create an
incentive for widespread adoption of this model.
Finally, there are two drivers for the successful
adoption of a centralised solution:
• Regulatory support – the in
• Industry needs the regulator(s) to publicly
support the use of a centralized model.
• Community support – the community of banks
and asset managers should collectively agree to
centralize their own data and encourage clients
to do the same. With this momentum, the
efficiencies of a centralized solution will become
obvious in a very short time.
• The opportunity to materially change the way the
industry conducts KYC and AML is real. There is
no better time for the asset management industry
to work together to drive positive change in a
very meaningful and impactful way. •••
Biography
Jeff Plein is the COO of Fullerton Fund Management. He is
responsible for Fullerton’s Compliance, Finance, Investment
and Fund Operations, Legal, Risk, and Technology globally.
Prior to Fullerton, Jeff held senior business operations roles in
Asia Pacific at PIMCO and BlackRock. Most recently Jeff
was Managing Director, Head of Operations at BlackRock,
and subsequently Head of Institutional Operations. Jeff
has worked in Asia Pacific for 20 years and has 14 years of
investment management experience.
an operational perspective, this selection improves
efficiency for our staff, because Org ID collects,
verifies, screens and continuously monitors entities
and related parties, highlighting risks throughout the
process. This allows our staff to concentrate on more
value-add tasks (such as making risk-based decisions
on PEPs, sanctions and adverse media) that inform
our ultimate decision on whether or not to on-board
a client.
Perhaps the biggest benefit of this solution
is one that I envision will accrue to the industry as
a whole – the concept of centralising the KYC and
AML process. We work in an industry where there
are multiple firms on-boarding the same client.
Clearly, there has to be a significant benefit for the
client, where the client record is created once and
then maintained and shared between all the entities
with whom the client works. The expected end result
is reduced costs, shorter on-boarding times and less
of a regulatory burden for individual asset managers.
In turn, this will improve the customer experience:
clients will only have to provide data and documents
to a centralized service once.
Singapore benefits from a progressive and
supportive regulator who actively encourages the
market to look for solutions and improve market
conduct. Certain Singapore banks are already looking
at innovative solutions for the banking sector. Other
financial service communities, including asset
management, should also progress in this area – or
risk being left behind. The adoption of a centralised
KYC and AML model eliminates this risk.
I believe the starting point to centralisation may
be developing a standardised policy across banks
and asset managers. Standardisation will go a long
way towards alleviating some of the pain around
the interpretation of the policies driving data and
documentation collection. Having a standardised
operating model, underpinned by digitisation, will
drive efficiencies and lower costs.
In the asset management community, there is a
significant overlap of clients across firms. Instead
of each firm performing KYC and AML on a single
client many times, a centralised KYC and AML
model will create a client record once and share that
output amongst many asset managers and banks,
leading to lower costs for both the client and the asset
manager.
The main drivers of the adoption of a centralised
model are cost, efficiency, regulatory compliance and
data security. There is one additional driver that the
“I believe the
starting point to
centralisation
may be
developing a
standardised
policy across
banks and asset
managers.
Standardisation
will go a long
way towards
alleviating some
of the pain around
the interpretation
of the policies
driving data and
documentation
collection.”