HK monetary corporations step up compliance hiring amid U.S. sanctions, safety regulation

By Alun John and Sumeet Chatterjee

HONG KONG, Sept 4 (Reuters)Monetary corporations in Hong Kong are scrambling to fortify their compliance operations following U.S. sanctions and China’s new nationwide safety regulation, even because the sector pushes to chop prices amid the coronavirus pandemic.

This underscores the rising challenges for corporations working within the Asian monetary hub, which was roiled final yr by often-violent pro-democracy, anti-China protests and is now within the crosshairs of mounting Sino-U.S. tensions.

Worldwide asset managers and Asian banks have stepped up compliance hiring, whereas some are coaching present workers and shopping for new expertise to offset a expertise crunch as candidates are unwilling to relocate amid the well being disaster and the uncertainty in Hong Kong, bankers, legal professionals and headhunters mentioned.

Demand for compliance workers has risen by as a lot as a 3rd from just a few months earlier, two headhunters mentioned.

“Prior to now three months we have had demand from top-tier asset managers in search of regulatory compliance legal professionals as a result of they want consultants in place when the U.S. and China preserve slapping sanctions on one another,” mentioned Olga Yung, regional director at recruiter Michael Web page Hong Kong.

As a result of sanctions are a “area of interest space”, firms are hiring legal professionals with some sanctions experience and supplementing with exterior regulation corporations, she mentioned.

‘AN ACTIVE MANDATE’

The USA has imposed sanctions on Hong Kong’s Chief Govt Carrie Lam and 10 different officers for what it says is their position in curbing political freedoms within the territory.

The sanctions got here after Beijing imposed in late June a sweeping safety regulation on Hong Kong, concentrating on seditious and subversive actions.

A senior banker at an Asian lender in Hong Kong mentioned he gave his compliance workforce an inventory of people and companies linked to the sanctioned officers and “the speedy response was to both shut all these accounts or rent 5 extra sanction-specialists to do a correct audit”.

The banker, declining to be named as a result of the data was non-public, mentioned they determined to rent two consultants and organise sanctions coaching for the remainder of the workforce, regardless of a company-wide try to restrict spending.

Chinese language banks are additionally hiring.

A headhunter mentioned his agency obtained “an energetic mandate” from two of China’s Large 4 banks for compliance consultants in Hong Kong following the U.S. sanctions, with out giving their names.

The penalties levied for breaching sanctions may be giant.

World banks working in Hong Kong, together with HSBC HSBA.L and Customary Chartered STAN.L, paid billions of {dollars} in fines in recent times for violating U.S. sanctions on Iran and anti-money laundering guidelines.

READING TEA LEAVES

It’s a Catch-22 scenario for monetary corporations in Hong Kong.

There are worries that corporations implementing sanctions may run afoul of the safety regulation. However banks additionally should guard their entry to the U.S. monetary system.

The safety regulation and the U.S. laws are broadly worded and provides a lot discretion to enforcement officers, including to the uncertainty, legal professionals mentioned.

This has pushed up the necessity for professionals, and means advising on compliance is like “studying tea leaves”, one added.

“The cellphone is ringing off the hook, and everybody would not solely need work completed, they need it instantly,” mentioned Benjamin Kostrzewa, a world commerce and regulatory lawyer at Hogan Lovells. “It is exhausting to even signal the engagement letter earlier than the subsequent shopper walks into the Zoom room”.

Nevertheless, assembly the demand is troublesome. Till lately there was restricted want for particular U.S. sanctions data in Hong Kong’s authorized and monetary industries.

Recruitment from rival monetary hubs has been curtailed due to virus-related curbs and political uncertainty in Hong Kong, say headhunters.

Some firms are utilizing expertise to bridge the hole.

A yr in the past “we had been very targeted on banks, however now purchasers are insurers and even casinos and actual property firms”, mentioned Bharath Vellore, APAC managing director at Accuity, which gives monetary crime and sanctions lists screening software program.

FACTBOX-How monetary corporations in Hong Kong could also be affected by U.S. sanctions

(Reporting by Alun John and Sumeet Chatterjee; Modifying by Himani Sarkar)

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