Dubai: Businesses based in the Middle East and North Africa (Mena) region are expected to face a significant rise in compliance risk scrutiny from global financial institutions and regulators, regional business leaders and compliance specialists have said.

According to professionals attending an EY Mena Sanctions and Financial Crime Symposium last week, nearly seven out of ten (68 per cent) of regional business leaders and senior compliance specialists said they expect to spend significantly more on sanctions and financial crime compliance over the next 12 to 18 months.

The findings come as financial crime challenges and risks become more significant across the Middle East and North Africa (Mena) region, with about 74 per cent predicting that the regional businesses are set for a significant increase in compliance risk scrutiny from global banks and regulators.

An exclusive survey of 300 business leaders participating in the EY symposium revealed that 63 per cent expect interaction with global correspondent banks relating to sanctions and financial crime matters to be significantly more over the same time period.

Risk assessments

The majority (64 per cent) of business representatives present at the event said their organisation had conducted a sanctions and financial crime risk assessment within the last year, although 20 per cent said their organisation had never undertaken such an exercise.

“The results of our exclusive poll show that never before have financial crime challenges and risks been greater across the Mena region. There is a significant awareness of an increased level of scrutiny across the Mena region from regulators and banks — and this level will further increase over the next 12 to 18 months,” said Michael Adlem, Mena Fraud Investigation & Dispute Services Leader, EY.

As a result of the increased awareness, EY said regional businesses are prepared to put the resources needed into ensuring their compliance standards are up to scratch.

“Raising awareness on key issues such as financial crime, sanctions, money laundering, illicit finance and other risk management challenges will help businesses in the region to be better equipped to manage the sanctions and financial crime risks,” said Adlem.

Investing more for protection

Despite the growing awareness of the growing compliance risk across the region, experts say regional businesses will need to invest more to protect themselves.

“The call for vigilance is a real one. This is a very interesting time in the world of compliance; businesses in Mena need to know how to evolve to keep up with the changing sanctions landscape,” Adlem said.

“For banks, knowing who your customers are and what’s going on in the transactions will require additional time and investment. We’re currently not seeing the required level of scrutiny and investigation that is actually needed.”

Experts say there will be a constant pressure to maintain this level of diligence. However, they add that if there is a continued effort to thoroughly understand the risks, identify where the risks lie and put controls in place to mitigate risk, relationships between businesses can be protected through transparent and clear communication.

The risks of fraud, bribery and corruption remain widespread across the Mena region. Results from the symposium show, however, that business growth can be achieved while also managing risks effectively.

“Regional banks’ access to the international financial system is a critical pillar in the economic growth of [the] Mena [region]. Enhancing risk management and compliance effectiveness is a necessary step in keeping channels open for banks. This includes compliance stress testing, risk assessments, urgent attention to customer due diligence and a proactive approach to technology-driven next-generation compliance tools,” said Stuart Jones, executive director, Fraud Investigation & Dispute Services at EY.


Download File