Over half admit to not having plans to ensure compliance with local and global requirements in 2019.
Two in five organisations in the Asia Pacific region are not ready to address new global regulations with many legal and compliance departments struggling to to deal with the complex features of new regulations and the speed of change, according to the Facing the future: Developing a response to regulatory change report.
The study polled over 100 senior legal and compliance professionals at financial services and other corporates in the APAC region to gauge their perceptions on changing local and global regulatory requirements as a major challenge. Almost half or 49% of the respondents worked for organisations operating in Singapore, followed by Hong Kong (48%) and Australia (42%).
The report which was released by professional services provider TMF Group and Asia Risk found that respondents gave an average score of 6.6 out of 10 when asked to consider the increasing volume and complexity of global and local regulations against their level of confidence in their organisation’s ability to remain compliant in 2019.
“Organisations in the APAC region must embrace this issue, not least because failure to comply may result in penalties including heavy fines and prison sentences,” TMF Group noted in its report. “And, whilst a top-down approach is optimal, it is also the responsibility of legal and compliance professionals to properly communicate this message throughout the company and provide the necessary road map towards full compliance.”
It noted how compliance responsibilities have increased enormously for APAC organisations in the past five years, with many countries adopting new rules and requirements in a bid to improve global financial transparency.
“In the last five to three years, every organisation has had to adapt and apply resources to need the needs of a more regulated and demanding environment all in the name of transparency,” TMF Group APAC’s head of family business and wealth solutions Leon Mao said in the report. “That’s been very challenging and even baffling at times, and the reason many need to reach out to organisations which can assist with understanding local requirements and compliance.”
The report highlighted how data privacy is seen by APAC organisations as the main regulatory compliance challenge with more than half of the survey’s respondents ranking it first out of the top three challenges their companies face, followed by cybersecurity threats and ethics.
Amidst their lack of readiness, the report highlighted how the compliance teams across APAC are broadly positive about the impact of new global regulation in terms of bringing greater financial transparency to the region with 74% of respondents giving a rating of five or more out of 10 for effectiveness.
The report urged organisations to go through their records, conduct client communications, gather feedback, generate reports and update their systems in their move to address new regulations in the region. Gaining a full understanding of new regulations will remain an ongoing process in APAC, the firm highlighted.
It pointed out how an internal review to ensure compliance with local and global requirements was one of the top activities undertake in the last 12 months by APAC organisations, with 3 in 5 of respondents rating it as a first priority. Hiring new talent, training existing staff and outsourcing to professionals are also on their agendas.
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