MENA Talks

Technology is driving rapid change in financial services, with the latest developments seen as a revolution rather than evolution. The finance sector is ripe for disruption, and start-ups are employing innovative technology – such as cloud computing, mobile communications, digital currency and blockchain – to enter the market. So far, banks have been using some of these technologies to help automate and augment their services, but will they soon be fighting for market share? Andy Critchlow, the Middle East editor for Breakingviews, speaks to Peter Smith, Managing Director, Head of Policy and Strategy at Dubai Financial Services Authority.

We are nearing the 10th anniversary of the global financial crisis and banks now face a new challenge – that of potential disruption to a degree never before experienced by their sector. Experts foresee opportunities for agile and sophisticated start-ups to meet the growing demand of a technology savvy consumer base, but how will banks respond? Andy Critchlow, the Middle East editor for Breakingviews, speaks to Bryan Stirewalt, Managing Director, Supervision, Dubai Financial Services Authority, about the future of financial institutions.

The third annual survey on financial crime in the MENA region, a joint initiative of Thomson Reuters and Deloitte, follows two previous surveys on the same topic. The surveys are conducted in the same month of each year with the same audience sample and contain a set of core questions. The reports from the survey will eventually form part of a longitudinal study that tracks changing norms and standards in the fight against financial crime in the MENA region.

From the responses, we identified four key themes:

• Pressure to comply intensifies

• Regulatory game changer

• Senior leadership – missing in action?

• The continued rise of technology

Last year’s top concern was how to cope with regulatory updates, and we saw that regulatory fatigue was becoming a very real concern for many compliance departments. Unfortunately, this survey’s results showed that the situation remained the same and whilst it may be understandable in the face of a regulatory avalanche, regulatory fatigue is not an acceptable defense.

Getting support from senior managers and securing their assistance to create the appropriate culture and awareness was a particularly notable theme in last year’s report, and this year responses revealed that many compliance officers are still struggling with what they perceive is a lack of support from senior management. It seems that active communication from senior management with the rest of the staff, as a method of raising awareness of the importance of compliance, and setting the right tone within the organization, is not a priority for many members of senior management.

Any increases in the compliance budget are spent on improving the sophistication of the compliance program as a way of coping with the increased pressure, but there is a need to be able to justify the substantial associated costs.

Money laundering remains a top concern for compliance officers, and cybercrime, an issue that seemed to be somewhat neglected in previous years, is beginning to receive more attention.

Reputation is still one of the biggest concerns for executives, and is probably a major driver of the surge in risk assessment requests in a bid to measure progress. It was noted, however, that almost half of risk assurance processes relied on internal resources only, which may not always deliver objective reporting.

With the growing demand for an increasing sophisticated technological response to compliance pressure, it’s not surprising that there is equal growth in demand for a specific skill set. It is no surprise therefore that training is becoming a more topical issue for many compliance and senior executives, especially as they need to be able to justify their investment in expensive technology. To maximize the usefulness and potential of the expensive technology requires the right skill set.

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With the introduction of VAT to the GCC as of 2018, businesses need to understand how best to prepare. Listen to Stewart Nivision, Global Head of Indirect Tax at Thomson Reuters, discuss how technology can steamline the process of VAT implementation.

Liquefied Natural Gas (LNG) has grown in importance, and within Middle East and North Africa (MENA) markets, Qatar and Algeria are among the largest exporters globally. Oil price volatility has significantly impacted the LNG market making it more affordable for countries across the globe. Asian markets in particular have seen an increased demand for LNG, especially China as they address environmental concerns. Vietnam, India and Thailand, have also shown a growing preference for LNG and governments are rethinking policies to meet consumption needs.

In this episode of MENA Talks, Anne-Katrin Brevik, Global Head of Research and Forecasting for LNG at Thomson Reuters, discusses the market outlook, trade flow activity, the impact on long-term contracts and the future for LNG.

Do SMEs across MENA really have the support and infrastructure they need to succeed? Neveen El-Tahri talks about how far we've come and how far we've yet go, in this episode of MENA Talks.

Financial transparency has become a priority for many governments and agencies around the world, ensuring that effective due diligence is now mission critical for certain organizations.

It is no longer possible to enter into a contract or business relationship without detailed, documented knowledge of the target entity without incurring substantial risk. Until recently, it was possible to keep financial interests confidential, but the regulatory environment has tightened to such an extent that this is no longer possible. Governments keen to attract investment are eager to show that they offer a healthy environment to do business, and that there is no place for corruption, fraud, human trafficking or threat finance, as well as many other ills.

Financial secrecy doesn’t always hide financial wrongdoing, however. It is entirely possible to be on the right side of the law but be ethically challenged. We saw this in the release of the Panama Papers – whilst there was little evidence of financial crime, it was not for nothing that people chose to place their money in offshore bank accounts, and that was to avoid scrutiny. While no law has been broken, this creates a great deal of public unease and a sense of injustice, and heightens the risk of regulatory degradation.

The Panama Papers therefore serve to illustrate the importance of conducting proper due diligence. It is now vitally important to identify the ultimate beneficial owner of any companies you may have an interest in – a failure to do so can result in a substantial fine and / or reputational damage.

Unfortunately, regulators appear to assume that the task of obtaining ownership information is straightforward, it is however anything but. While ownership documentation is often required as part of the onboarding process, the task of continuously monitoring ownership changes and verifying client-provided details can present serious challenges due to the lack of transparency, especially for privately-held companies.

In this podcast, James Swenson, Head of Financial Crime and Reputational Risk Managed Services at Thomson Reuters, speaks to Former Rear Admiral Chris Parry about the various issues of understanding ultimate beneficial ownership and why it is an increasing challenge for compliance officers.

Supply chains have become increasingly complex, making them challenging to manage at a time of growing regulatory risk. The drop in oil prices has meant a headcount reduction across the industry, mostly in supporting departments, at a time when supply chains require more, not less, supervision.

Public Private Partnerships, or PPPs, have started to gain precedence as a way of structuring and funding large-scale projects in MENA. In this episode, we explore its’ challenges and opportunities with Udayan Mukherjee, Managing Partner at Dentons.