Outsourcing has become a critical component of financial institutions’ management of their business operations and control of their costs.
Many business owners shy away from outsourcing but countless others depend on it. Regardless of which view you take, it is important to know that outsourcing is here to stay. Outsourcing promotes consistency, allows the FI to focus on strategic tasks and may introduce cost savings.
If there is one rule about outsourcing, it is that you should not outsource and forget. Financial Institutions (FIs) should outsource, review and monitor; and work with your outsource provider as a partner, exploring what is needed to be more successful.
In September 2014, the Monetary Authority of Singapore issued consultation papers on outsourcing requirements to ensure that FIs have sound risk management practices for outsourcing arrangements. This set of guidelines should also enhance the service levels to be provided by the service providers.
A recent KPMG Global Anti-Money Laundering (AML) Survey found that 88 percent of respondents indicated that AML is a priority for senior management, up from 62 percent in 2011.
In fact, AML compliance has never been higher on the agenda of senior management. Financial institutions are making significant changes in response to regulatory action and increasingly far-reaching global AML regulations, changing the AML setups from a standalone function under compliance, to an increasingly complex and overarching function cutting across legal, risk, operations and tax.
In April 2015, the Monetary Authority of Singapore announced that it would progressively increase the level of disclosure on supervisory actions taken for breaches of AML/CFT regulations. This is a positive move in the spirit of raising awareness about money laundering, and what needs to be done to combat it.
For these changes to be effective, it is important for a culture of compliance to be established throughout the organisation. Driving culture effectively and successfully hinges on leadership and the right tone from the top.