KPMG's Financial Services Briefings is a quarterly newsletter discussing topical issues, changes and updates of interest to institutions in the financial services sector.
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.
The accounting for financial instruments is changing.
In July 2014, the International Accounting Standards Board issued the completed version of IFRS 9 Financial Instruments which will replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 (2014) provides revised guidance on the classification and measurement of financial assets, an expected credit loss model for calculating impairment and the general hedge accounting requirements.
In Singapore, the Accounting Standards Council is expected to adopt the final version of IFRS 9 without modification effective from 1 January 2018.
In this issue, we offer our thoughts on the impact and implications of the finalised standard to financial institutions.
How has the role of the CFO evolved in the past decade?
As the role of finance functions is being redefined, CFOs are challenged to change their traditional finance processes and operational support models in an effort to deliver faster, more accurate and insightful analysis and reporting – while at the same time managing risks and reducing costs.
A recent KPMG survey found that Singapore based CFOs in the Financial Services sector seem to be moving at a slower pace in gearing their finance function towards a greater strategic role, compared to their peers in Europe and the US. This may be due to how they tend to regard their finance department more as an operational back-office function rather than a strategic value-driver.
The intelligent finance organisation of today and indeed the future must go beyond its business-as-usual financial operations, reporting and control roles to become a value-adding provider of intelligence that the Board and business units can depend on to make strategic business decisions.
Many think that cyber attacks will never happen to their organisation.
Truth is there are almost daily occurrences of cyber attacks from individual, opportunistic hackers, to professional and organised groups with strategies to systematically steal intellectual property and disrupting businesses. The risk posed by cyber attacks is ever present, compounded by the fact that dealing with cyber threats is a complex challenge.
Read on to find out why large global organisations should move from a reactive to proactive operating mode in dealing with cyber threats. This calls for transformative change.
With the emergence and positioning of Singapore as a global financial hub, its financial services industry has experienced rapid changes to the way it conducts business and manages systems & operations.
To ensure sound technology risk management and information security practices, the Monetary Authority of Singapore (MAS) has recently issued an updated guidance to financial institutions to address existing and emerging technology risks within the financial services industry.
Recent enhancements proposed by the Monetary Authority of Singapore (MAS) to the tax and regulatory framework of the Islamic finance sector in Singapore demonstrate that the authorities have renewed their commitment to developing Islamic finance services.
Signalling a shift towards exploring non-fiscal means to boost the industry, the authorities have included proposals to shorten the approval processes and provide greater clarity and certainty for the regulatory and tax treatment of Islamic finance products.
As procurement functions mature, it becomes increasingly difficult to achieve competitiveness by leveraging traditional price levers. Many functions today are therefore seeing the optimisation of their end-to-end supply chains as one way of doing so.
The Financial Action Task Force (FATF) released the revised Anti-Money Laundering and Countering the Financing of Terrorism (CFT) recommendations in February 2012. In response to the recommendations, Singapore has designated serious tax offences under the relevant sections of the Singapore Income Tax Act and Goods and Services Tax Act as a money laundering predicate offence
In a world where most IT environments source their requirements from a multitude of service providers, service integration is the key to unlocking the benefits of this multi-sourced environment. It reduces risk, drives cost savings and improves the quality of service provided to the end user. Whilst beneficial, it also presents significant governance challenges in ensuring the service quality and efficiency an organisation is looking to achieve. Service Integration - which is the coordination of people, processes and tools/technology across multiple service providers, helps to manage the quality and effectiveness of delivery to the end user.
Late last year, regulators in the United States and Britain launched an investigation into London's interbank rate setting process. These concerns have prompted scrutiny of lending benchmark rates in many parts of the world. Singapore has announced reviews of the way interbank benchmark rates were set.
Tighter regulatory regimes, especially in the fight against money laundering and the financing of terrorism, have become one of the key themes in the regulatory framework for financial centres and financial institutions. Senior management in financial institutions need to know the key risks impacting their businesses and advise regulators on the controls that are in place to mitigate associated money laundering risks.
In this issue, we discuss one area of growing interest - the Advanced Persistent Threats (APTs). This form of cyber attack focuses on the unique vulnerabilities of the target and is coordinated by an organisation to attack a specific target. We talk about how these risks can be mitigated and why it is important to do so right now. This issue will also include a section featuring recent updates in regulatory issues, accounting standards and tax legislation which may be of interest to you.
Financial institutions around the world are facing the renewed vigour of enforcement in existing rules and regulations, and managing new regulatory directives. It is no longer enough for compliance departments to simply communicate rules and regulations. They must also play a lead role in managing behaviour.
KPMG in Singapore has released the results from a recent analysis, looking at the significance of fair value disclosure for financial institutions as required under Singapore FRS 107. The findings will be revealed within the article. This issue will also include a section featuring recent updates in regulatory issues, accounting standards and tax legislation which may be of interest to you.
In this issue, our feature focuses on the upcoming Foreign Account Tax Compliance Act (FATCA). Soon to go into effect, FATCA requires foreign banks and other financial institutions to provide the U.S. Government with information about the financial holdings of U.S. tax-obligated persons. Failure to cooperate can trigger stiff penalties.
In this first issue, our anchor topic focuses on domiciled fund vehicles in Singapore - the tax incentives and operational benefits they enjoy, local standards of professionalism and their impact on the cost of doing business, and some of the benefits that funds accrue when they use independent directors.