Professional Documents
Culture Documents
INTERNATIONAL ACCOUNTANT Jan 202 Magazine
INTERNATIONAL ACCOUNTANT Jan 202 Magazine
INTERNATIONAL
ACCOUNTANT
JANUARY/FEBRUARY 2024ISSUE 133
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CONTENTS
In this issue
Contributors2
Meet the team
17 23
News and views 3
New statistics underline the need for
global tax reform
AIA news 5
AIA Member in Practice wins
Entrepreneur of the Year
Malaysia17
Climate standard 8 The fight against money laundering
AIA signs statement of support for ISSB Muhamad Nazri Shaidon (Head of AML Compliance23
The AIA has recently signed a climate Advisory and Training) explains how Know your statutory obligations
declaration in support of a new ISSB Malaysia is preparing for the upcoming Ian Waters (Compliance for
climate standard to help drive an mutual evaluation 2024-25 in its attempt Accountants) explains the ethical
enhanced global corporate reporting to tackle money laundering and terrorist principle of professional behaviour, the
system. financing. statutory obligations upon firms, and the
requirements of the Provision of Services
10 20 Regulations 2009.
26
Student profile 10
What I have learned from AIA Achieve Interview20
Arthur Kaliisa shares his experiences of Meet Linda Richards
studying with the AIA Achieve Academy Linda Richards (AIA) sheds light on
and how the programme can help her involvement with the AIA and her
students develop their professional skills. perspective on the evolving landscape of
the accounting industry, the significance
CPD12 of diversity and inclusion, and the Wellbeing26
The power of continuous professional challenges posed by technological Stress busting techniques
development advancements. Muhammad Bilal (M B Dean
How CPD can help you rise to new Accountants) shares some tips on how
heights in your career. 14 accounting professionals can improve
their wellbeing and strengthen their
Due diligence 14 mental health.
Are you asking the right questions?
David Potts (AIA) explores ‘simplified’ Dates for your diary 28
and ‘enhanced’ due diligence and Upcoming events
explains how the right questions enable
the effective management of money Technical29
laundering risk. Global updates
IAN WATERS
T
accountancy firms with
compliance – AML, ethics,
he requirements of entails so that you can make sure your firm professional standards and
the International Ethics is in compliance with the principles. more, and is a coach and
Standards Board for He also examines the Provision of specialist in regulatory policy
Accountants (IESBA), which Services Regulations 2009, under which and practice, compliance and anti-
have been adopted by AIA, your practice is required to provide money laundering.
set out the fundamental specified information to its clients and
principles of ethics for professional those wishing to become clients. LINDA RICHARDS
accountants. These principles establish Another key aspect of practice
the standard of behaviour expected compliance involves due diligence, and the Linda Richards is Vice
of a professional accountant, which importance of knowing and understanding President of the AIA, as well
include integrity, objectivity, professional your client’s identity and business activities as a Finance Director at
competence and due care, confidentiality so that any money laundering or terrorist Wildstar Films, with vast
and professional behaviour. financing risks can be managed. In his experience in television
In his article ‘Practice compliance: article on page 14, David Potts considers production. She has held
know your statutory obligations’ the different levels of diligence that are various roles at the BBC, ITV and
(page 23), Ian Waters explains the ethical required to enable you to effectively Endemol Shine UK and others.
principles of professional behaviour and manage money laundering risk.
some of the statutory obligations placed Simplified due diligence can usually MUHAMMAD BILAL
upon accountancy practices. Ensuring be applied when a client is low risk, in
data privacy and security is a legal accordance with the firm’s risk assessment With an accounting degree
requirement, requiring the personal data criteria. However, you must also consider and MBA in Accounting and
you hold to be processed legally and fairly, the services you are being asked to provide Finance, Muhammad Bilal is
and giving rights to the data subject about to the client, alongside delivery methods, an accomplished accounting
the processing of their personal data. and whether this is something assessed as and finance professional
The Information Commissioner’s Office being of higher risk. A risk-based approach with over two decades of
is responsible for enforcing the provisions to client due diligence will identify experience. He currently serves as a
of the UK General Data Protection situations in which there is a higher risk of consultant with a leading national firm in
Regulation and the Data Protection money laundering or terrorist financing, West Yorkshire.
Act 2018. Following the accountability when the Money Laundering Regulations
principle sets out six key areas requiring specify that ‘enhanced’ due diligence must DAVID POTTS
you to have appropriate measures and be undertaken.
records in place to be able to demonstrate The fight against money laundering David Potts is Director of
your compliance. These include lawfulness, is, of course, a truly international battle. Operations & MLRO at the
fairness and transparency; purpose In his article on page 17, Muhamad AIA, working with regulatory
limitation; data minimisation; accuracy; Nazri Shaidon explains how Malaysia bodies across the world to
storage limitation; and integrity and is preparing for the upcoming mutual ensure AIA members meet
confidentiality. Ian’s article contains a evaluation 2024-25 in its attempt to tackle the appropriate standards of
breakdown of what each of these measure money laundering and terrorist financing. competence and professionalism.
OECD
DIGITAL PLATFORMS
ARTIFICIAL INTELLIGENCE
CARBON PRICING
AIA
NEWS
AWARD
Remain ESG
compliant
Environmental, social and
governance (ESG) regulations
are government standards for
ESG-related actions, reporting or
disclosures. While the ESG space
is mostly unregulated, various
legal requirements have already
passed in some jurisdictions, with
the EU leading in this regard, but
implemented at different paces.
Some businesses may already
be undertaking ESG reporting and
disclosures, depending on their size
and industry.
AIA welcomes the recent
update report from Squire Patton
Boggs, which looks at the myriad
of regulations across the world and Shabir Djakiodine
what organisations should be doing
to remain compliant. AIA Member in Practice Shabir London Business Awards 2024,
AIA Chief Executive, Philip Djakiodine, Founder of Euro showcasing Euro Accounting’s
Turnbull added: ‘Embracing ESG Accounting, achieved notable success excellence within the small and medium-
regulations isn’t just a necessity; by winning Entrepreneur of the Year sized enterprise (SME) sector and its
it’s a chance for businesses to 2023 and becoming a finalist for commitment to innovation and growth
contribute positively to the world Businessman of the Year 2023 at within the London business community.
while securing their future resilience the 8th Annual Birmingham Awards. Euro Accounting offers business
and relevance in a rapidly changing The event celebrated excellence across incorporation, domiciliation, accounting, tax,
landscape.’ business sectors and highlighted HR and payroll services in Ireland, France,
Euro Accounting’s contributions to Switzerland and the United Kingdom. They
See the Squire Patton Boggs report Birmingham’s business community. are expanding and have now set up an
‘Update: ESG laws across the world’ at: This triumph was swiftly followed by office in Dubai, the land of opportunities in
tinyurl.com/bde8f5vm the firm’s advancement to the finals of a multicultural location. This development
the London Chamber of Commerce SME is a significant step forward for both
Shabir and Euro Accounting Ltd, since it services and specialist guidance. AIA’s the forefront of the business community.
opens up new opportunities to provide extensive support services are tailored to Under the guidance of the AIA, the
professional services to clients all around help small and medium-sized practices firm remains a beacon of success,
the world. Euro Accounting also provides work, evolve and grow. Members in embodying the spirit of innovation,
services in most European countries and Practice, like Shabir, have access to leadership and excellence that defines
beyond through a network of international comprehensive resources to ensure the dynamic landscape of the UK’s
accountants, lawyers and consultants the success of their operations, while business community.
called Gentia Alliance CIC, set up by Shabir. adhering to all necessary regulations. Well done to Shabir and Euro
The AIA practising certificate opens The dual recognition highlights Euro Accounting on this remarkable
doors for members to operate in public Accounting’s consistent dedication to achievement, and AIA looks forward to
practice, providing a host of benefits, excellence and success, with Shabir’s witnessing further milestones on their
including additional recognition, support leadership having propelled the firm to journey of excellence.
SCHOLARSHIPS
CONFERENCE REPORT
CPD
New CPD on demand explores the sustainability challenges it is also seen to be so!
titles released being faced by society and their impact AIA members and non-members
on the accounting profession. seeking to enhance their knowledge
AIA’s commitment to fostering Additionally, leading ethics expert and expertise can access the CPD on
continuous growth and learning is Chris Cowton delivers Business Ethics Demand portfolio (see tinyurl.com/
underlined by the latest release of new for SMEs, examining the main elements 2877f9v6), ensuring a flexible and
CPD on Demand titles. Notably, these of an ethics programme that can help comprehensive learning experience
include a comprehensive three-part SMEs to chart the right course – and tailored to their professional growth
series of sustainability events, which ensure not only that it is ethical but that needs.
C
A global endeavour
lose to 400 organisations from Regulators and standard setters from ASEAN, Brazil,
64 jurisdictions have committed Brunei, Canada, the European Union, Germany,
to advancing the adoption or use Ghana, Hong Kong, Japan, Kenya, Mauritius, Mexico,
of the International Sustainability Myanmar, Nigeria, the Philippines, Singapore, Turkey,
Standards Board (ISSB)’s climate- the United Kingdom, Uruguay and Vietnam have
related reporting at a global level. welcomed the work of the ISSB (see tinyurl.com/
This groundswell of support from companies, 3y62ynxy), as jurisdictions around the world start
investors, stock exchanges, the accountancy considering how they may incorporate the ISSB
profession, multilaterals, NGOs, universities, data Standards into their regulatory frameworks.
analytics providers, corporate advisors and others IOSCO and the Financial Stability Board of G20
comes as the ISSB embarks on a new phase – from reiterated the critical support they brought on the
creation to action – following the issuance of the first announcement of the creation of ISSB at COP26,
two ISSB Standards in June 2023. joined by the IMF, OECD, United Nations entities,
Earlier this year, the ISSB Standards were
Companies, the World Bank, the Asian Development Bank, and
endorsed by IOSCO, the global body for international jurisdictions and Network for Greening the Financial System.
securities regulators. Since then, companies, other market The ISSB’s key partners in the sustainability
jurisdictions and other market players from around players have disclosure landscape – including the Global Reporting
the world have been paving the way towards Initiative, the Carbon Disclosure Project and the
adopting or using the ISSB Standards.
been paving the Taskforce on Nature-related Financial Disclosures
The declaration of support, announced on way towards – also reaffirmed their support for the work of the
Finance Day at COP28, demonstrates the strong adopting the ISSB. The ISSB continues to work closely with these
support to advance action-oriented responses to the ISSB standards. partners to reduce market fragmentation in the
risk of climate change (see tinyurl.com/yc4ax6xh). sustainability disclosure landscape. ●
Arthur Kaliisa:
What I have
learned from Achieve
been instrumental in enhancing my skills and
Arthur Kaliisa shares his experiences of knowledge as an accountant. The decision to
leverage the Achieve Programme was motivated
studying with the AIA Achieve Academy, by the need for a well-structured study regimen
and how the programme can help that could seamlessly align with the demands of
my work.
students develop their professional skills. The Achieve personal study planner emerged
as a valuable asset, offering the necessary
structure to maintain focus on my studies amidst a
demanding workload. Its strategic layout enabled
I am Arthur Kaliisa, currently residing in Doha, me to navigate through the material efficiently,
Qatar. Within the ground services department of a
ensuring a comprehensive understanding of key
leading airline based here, I serve as a contracts specialist.
concepts essential for my role.
In my present capacity, my responsibilities encompass the
negotiation and execution of airport service contracts, which One of the standout features of the Achieve
span various back-office functions, including airport use and lease Programme is its provision of practice questions
agreements, systems, baggage reconciliation services and fast-track and mock exams, meticulously designed to mirror
services. the actual examination format. This aspect proved
In addition to my role in the airline industry, I hold the title of an to be invaluable in my exam preparation, offering
International Accountant. Until recently, I held a position on the Finance a simulated experience that not only familiarised
Committee of a non-governmental organisation in Uganda. This me with the exam environment but also honed my
committee was established to address finance and administration ability to tackle diverse question formats.
matters on behalf of the Board of Trustees, the governing body of Furthermore, the constructive feedback from
the organisation. The primary responsibility of both the Board and
e-tutors played a pivotal role in refining my exam-
the Finance Committee is to oversee the strategic direction of the
taking strategy. Understanding the nuances of
T
organisation.
what examiners seek in responses allowed me
to tailor my answers more effectively, ultimately
he initial draw to enrol with the contributing to improved performance.
AIA for my studies was a referral In essence, AIA Achieve Academy has proven
from Dr Jeff Wooller, during my to be a strategic companion in my professional
professional exams with another journey, offering a comprehensive and tailored
body. Struggling with limited approach to education. Its focus on structured
support and study materials, and study, realistic exam simulations, and expert
after initial contact with the AIA, I quickly realised guidance has significantly contributed to my
they were the right association for me. The appeal success in navigating the challenges of professional
lay in their cost-effective study route and a distinct development within the realm of accounting.
emphasis on students and customer service,
which aligned well with my academic needs and Advice to prospective students
aspirations. For prospective students considering AIA,
enrolling on AIA Achieve Academy is a sound
The AIA Achieve Academy investment in your professional development.
I chose to study using the Achieve Programme. Achieve not only imparts structured learning
My work is demanding, so it was easier to but also aids in goal setting, helping students to
stay focused with a well-structured study stay on track. The online learning platform offers
programme. Incorporating the Achieve Academy regular notifications at different study stages,
into my professional development journey has allowing you to monitor your progress effectively.
of the task requires a keen attention to detail and and high professional standards associated with
adaptability to address challenges that may arise AIA have not only distinguished me in the field
during the contract review and renewal processes. but also contributed significantly to my career
Overall, this demanding aspect of my role keeps advancement. ●
The power of
continuous
professional
development
A strategic approach
Embarking on your CPD journey demands
Continuous professional development can a strategic approach. It’s your responsibility
help you rise to new heights in your career. to nurture your career development, making
I
informed decisions about the relevance of your
CPD activities. Consider three pivotal questions
n the ever-changing world of accountancy, in your planning process. What do you want to
staying ahead is not just a desire – it’s a achieve? What do you need to learn? How will
necessity. CPD is the key to unlocking and you learn it?
enhancing your abilities in the workplace, A personal development plan and a
transforming learning into a conscious and competency map are invaluable tools. The
proactive journey. Embracing a variety of personal development plan helps to structure
methodologies, from immersive workshops and your CPD, aligning activities with your role and
conferences to convenient online courses and responsibilities. The competency map identifies
e-learning modules, CPD provides a gateway for the essential knowledge, skills and attributes
upskilling – irrespective of your career stage, age or needed for effective performance.
educational background. The question lingers: how
does CPD benefit you personally? Your roadmap to success
Consider it as your secret weapon for keeping The CPD market is teeming with opportunities
your skills and knowledge razor sharp, preparing and choosing the right learning path is
you for increased responsibilities, boosting your crucial. Set realistic targets aligned with your
confidence, fostering creativity in tackling challenges subscription period, reflecting on your progress
and empowering you to make important decisions regularly. Balancing your CPD activities with
that propel your career to new heights. work commitments is essential to avoid the last
minute rush.
Navigating the new normal AIA CPD on Demand offers a diverse range
The events of 2020 catapulted remote work into of webinar recordings, allowing you the flexibility
the mainstream, demanding a swift embrace of to access them whenever and wherever you
technology. Keeping abreast of technological are. These on-demand webinars not only cover
advancements becomes paramount to staying essential accounting topics but also present
ahead. CPD ensures that you not only adapt to an opportunity to explore various personal
these changes but also swiftly acquire the essential development subjects.
skills in this tech-driven era.
Reflect, adapt, value: making CPD
Sustaining passion for your profession meaningful
We’ve all had those days when we’ve thought Don’t treat CPD as a mere ‘tick-box’ exercise;
of throwing in the towel. However, CPD can act see it as a valuable investment in your growth.
as a catalyst, introducing you to fresh skills and Take time to reflect on your learnings, apply
rejuvenating your knowledge base. This infusion of them in your role, and identify areas for
© Getty images/iStockphoto
new perspectives keeps you engaged and serves further development. Continuous professional
as a reminder of why you chose your profession in development is not just a journey; it’s your
the first place. The result is increased effectiveness passport to sustained success in the ever-
and engagement in your role. evolving professional landscape. ●
01423 799949 45
OVER
YEARS
I
t is well established that criminals and bad David Potts
Director of Operations &
actors often seek to mask their identity MLRO, AIA
by using complex and opaque ownership
structures.
As accountants we have a key tool
available to disrupt economic crime and
to ensure that illicit finance is prevented from
entering the legitimate economy. Client due
diligence is all about knowing and understanding
your client’s identity and business activities so
that any money laundering or terrorist financing
risks can be managed.
Effective client due diligence is, therefore,
a key part of anti-money laundering defences.
By knowing the identity of a client, including who
owns and controls it, you are not only fulfilling
your legal and regulatory requirements but
equipping yourself to make informed decisions
about your client’s standing and acceptability.
Client due diligence also helps you to construct
a complete understanding of your client’s typical
business activities. By understanding what normal
practice is, it is easier to detect abnormal events,
which in turn may point to money laundering or Principles of client due diligence
terrorist financing activity. Client due diligence requires the collection and
The Money Laundering Regulations require recording of information about a client’s personal
that the extent and breadth of your client due background and business, or ‘know your client
diligence measures reflect your assessment of information’.
the risks. Fundamentally this means focusing The Money Laundering Regulations outline
your effort on higher risk clients, whilst avoiding the required components of good client due
disproportionate effort for lower risk clients. diligence. You must apply them at the start of a
Broadly speaking, simplified due diligence new business relationship (including a company
may be applied in circumstances where your formation), at appropriate points during the
firm has determined that a client is low risk lifetime of the relationship and when an occasional
(with certain exceptions). For clients where high- transaction is to be undertaken:
risk characteristics are present, your firm must ● Identify the client: This involves knowing who
undertake enhanced due diligence. The scenarios the client is and then verifying their identity
and requirements for undertaking enhanced due (i.e. demonstrating that they are who they
diligence are explored throughout this article. claim to be) by obtaining documents or other
information from independent and reliable How should my firm apply simplified due
sources. diligence to a client?
● Identify beneficial owner(s): This is so that The Money Laundering Regulations require only
the ownership and control structure can be that you must comply with standard client due
understood and the identities of any individuals diligence measures; however, you may vary the
who are the owners or controllers known. On a extent, timing or type of measures taken to reflect
risk sensitive basis, reasonable measures should lower risk.
be taken to verify their identity. The components of good client due diligence
● Gathering information: This should be outlined in the Regulations are:
conducted on the intended purpose and nature ● identifying the client (i.e. knowing who the
of the business relationship. client is);
● verifying the identity of the client (i.e.
When determining the degree of client due demonstrating that they are who they claim
diligence to apply, your firm must adopt a risk- to be) by obtaining documents or other
based approach, considering the type of client, information from independent and reliable
business relationship, product or transaction, and sources;
ensuring that the appropriate emphasis is given to ● identifying the beneficial owner(s) so that
those areas that pose a higher level of risk. the ownership and control structure can
be understood and the identities of any
Should my firm be applying simplified due individuals who are the owners or controllers
diligence? can be known;
Simplified due diligence can usually be applied ● on a risk-sensitive basis, taking reasonable
when a client is low risk, in accordance with the measures to verify the identity of the beneficial
firm’s risk assessment criteria. To perform this owner(s); and
risk assessment, you should ensure that your firm ● gathering information on the intended purpose
takes into account risks outlined in the National and nature of the business relationship.
Risk Assessment of Money Laundering and
Terrorist Financing 2020 (see tinyurl.com/ Examples of simplified due diligence may include
45khntf6) and in the sectoral risk outlook the following:
published by the Accountancy Anti-Money ● in the case of a corporate client, perhaps only
Laundering Supervisors Group (see tinyurl.com/ verifying a single director’s identity;
mry4h5xj). ● reducing verification requirements for ultimate
The Money Laundering Regulations set out low beneficial owners;
risk indicators, which should be considered too: ● requiring fewer identity documents for an
● public authorities or state-owned businesses; individual; and
● lower risk geographic location – both of the ● carrying out periodic monitoring at longer
client and its activities; intervals.
● regulated businesses – such as banks and
other financial institutions; and Documenting simplified due diligence
● businesses listed on the stock exchange Your firm should document your processes and
(or a foreign exchange where the rules are explain which client due diligence actions are
equivalent to those in the UK). required when you are undertaking simplified
due diligence. These processes will be reviewed
As a firm, you must also consider the services during any anti-money laundering compliance
you are being asked to provide to the client, review undertaken by AIA.
alongside delivery methods, and whether this is Furthermore, even though your firm may
something assessed as being of higher risk in your be undertaking solely simplified due diligence
firm-wide risk assessment; for example, providing on a client, it is important to note that ongoing
trust or company services. If the services you monitoring is still required by the Money
are providing are considered high risk or if the Laundering Regulations.
client has high-risk characteristics, such as being This is useful when considering whether
a cash-based business, then simplified due anything in your business relationship – or any
diligence is not appropriate, even if any of the information that has come to you while providing
©Getty images/iStockphoto
other conditions above are met. services for that client – indicates that it is no
As a minimum requirement to perform longer appropriate to carry out simplified due
simplified due diligence, there must be no high- diligence and instead a more in-depth assessment
risk characteristics related to the client. is required.
Additional guidance When should my firm undertake Enhanced due diligence may also include one
and free webinar enhanced due diligence on a client? or more of the following measures:
recording A risk-based approach to client due diligence ● Seeking additional independent, reliable
Log in at www. will identify situations in which there is a higher sources to verify information, including
aiaworldwide.com/
risk of money laundering or terrorist financing. identity information, provided to the
my-aia/aml/cdd-
In these instances, the Money Laundering business.
requirements/ for more
information, including Regulations specify that ‘enhanced’ due ● Taking additional measures to understand
templates, checklists diligence (Regulation 33) must be applied: better the background, ownership and
and a free webinar ● where there is a high risk of money financial situation of the client, and other
recording outlining laundering or terrorist financing; parties relevant to the engagement.
your client due ● in any occasional transaction or business ● Taking further steps to be satisfied that the
diligence requirements. relationship with a person established in a transaction is consistent with the purpose
high-risk third country; and intended nature of the business
● if a business has determined that a client or relationship.
potential client is a politically exposed person, ● Increasing the monitoring of the business
or a family member or known close associate relationship, including greater scrutiny of
of a politically exposed person (taking into transactions.
account amendments to the Money Laundering
Regulations made in 2023 relating to UK Ask the right questions
domestic politically exposed persons); Performing enhanced due diligence at certain
● where a client has provided false or stolen trigger points is a regulatory requirement which
identification documentation or information on often means that more in-depth questions are
establishing a business relationship; asked of clients. It is important to make use of
● where a transaction is complex and unusually your professional scepticism to judge whether
large, and there is an unusual pattern of the information you are being told is accurate
transactions which have no apparent economic or trustworthy and to question further where
or legal purpose; and clients may be uncooperative or things do not
● in any other case which by its nature can seem right.
present a higher risk of money laundering or Remember that you must have documented
terrorist financing. policies and procedures that trigger the
application of enhanced due diligence both at
When undertaking enhanced due diligence on client onboarding and for ongoing monitoring.
a client, the following steps must be taken. As far You should also record your decisions and
as reasonably possible, examine the background reasoning – both to accept and decline a client.
and purpose of the engagement. You should
increase the degree and nature of monitoring of Further detailed guidance is provided within
the business relationship in which the transaction ‘Anti-Money Laundering Guidance for the
is made, to determine whether that transaction or Accountancy Sector’ for situations where
that relationship appears to be suspicious. simplified and enhanced due diligence are
For clients that are higher risk due to required, including what constitutes simplified
Author bio connections to a high-risk third country: due diligence and enhanced due diligence
David Potts is Director of
Operations and MLRO at ● obtain additional information on the client respectively. This guidance is available at:
the AIA. and its ultimate beneficial owners; www.aiaworldwide.com/my-aia/aml. ●
S
tepping up the fight against Muhamad Nazri Shaidon to anti-money laundering, countering the
Head of AML Advisory and
money laundering activities Training, Law Enforcement financing of terrorism and countering the
is a crucial task that involves Agencies in Malaysia financing of proliferation of weapons of mass
concerted efforts from destruction.
governments, regulatory bodies Malaysia was previously assessed
and reporting institutions in 2014‑15, and the findings and
under the Anti-Money Laundering, Anti- recommendations were published in Malaysia’s
terrorism and Proceeds of Unlawful Activities Mutual Evaluation Report 2015. The upcoming
Act (AMLA) 2001. Money laundering is the mutual evaluation of Malaysia will take place
process of disguising the origins of illegally between April 2024 and December 2025.
obtained money, typically by passing it through The designated non-financial businesses
a complex sequence of banking transfers or and professions sector also plays a critical role
commercial transactions. in the global effort to combat money laundering
As a member of the Financial Action Task and terrorist financing, as recognised by the
Force and the Asia Pacific Group on Money Financial Action Task Force.
Laundering, Malaysia is subjected to ongoing The mutual evaluation process is a key
review by means of mutual evaluation component of the anti-money laundering and
exercises. This assesses the country’s level counter financing of terrorism framework,
of compliance and the effectiveness of where a country’s measures are assessed
international standards – i.e. Financial Action against international standards. Malaysia’s
Task Force recommendations – relating mutual evaluation in 2024-25 is likely to be
© Getty images/iStockphoto
conducted by the Financial Action Task Force or a collect customer information as required by
regional body. internal standard operating procedures or policies.
Due diligence should not be viewed as a
Preparing for mutual evaluation mere checklist or tick-box exercise. Rather, it
To prepare for this evaluation, the designated is a comprehensive and ongoing process that
non-financial businesses and professions sector requires careful examination of various factors.
should consider the following steps. It is a comprehensive and dynamic process that
involves in-depth analysis, ongoing assessment
1. A comprehensive risk-based approach and adaptability. It is a crucial step in minimising
Implement a robust risk-based approach to anti- risks and making informed decisions in various
money laundering and countering the financing business contexts.
of terrorism measures. Tailor preventive measures
based on the identified risk levels, including 3. Appointment of a compliance officer
customer due diligence, transaction monitoring The appointment of a compliance officer is a
and enhanced due diligence. The risk-based critical step for organisations aiming to adhere
approach entails two assessments: institutional to laws, regulations and internal policies.
risk assessment; and customer risk profiling: A compliance officer plays a key role in ensuring
that the company operates within the legal and
Institutional risk assessment ethical boundaries of its industry by developing
A reporting institution is expected to identify risk and implementing compliance policies and
factors that affect its business and address the procedures and communicating policies to
impact on the reporting institution’s overall money employees.
laundering and financing of terrorism risks. For The compliance officer should have a deep
this, non-financial businesses and professions are understanding of anti-money laundering and
required to take sufficient steps to identify, assess countering the financing of terrorism, strong
and understand their risk at the institutional level, analytical skills and the ability to communicate
taking into consideration all relevant risk factors. effectively with various stakeholders. Additionally,
they should be independent and have the
Customer risk profiling authority to enforce compliance measures within
For customer risk profiling, non-financial the organisation. The role of a compliance officer
businesses and professions are expected to is crucial in maintaining the integrity of the
consider the inherent risks arising from the types organisation and ensuring it operates ethically and
of products, services and distribution channels legally.
that the customers are using and implement
appropriate measures to manage and mitigate the 4. Beneficial ownership transparency
risks identified therein. This requires granular and Companies must identify beneficial owners
well-defined risk categories for better customer based on cascading steps. For the onboarding of
segmentation and clearly defined scenarios where legal entities, they must have internal standard
a customer should be automatically rated as high operating procedures for the identification of
risk, regardless of other factors. ultimate beneficial owners.
There are common factors that may influence One of the common issues with the
a customer’s risk ranking, depending on the identification and verification of beneficial owners
customer risk profiling methodology. For example, is that identification stops after a limited number
if the beneficial owners are identified as politically of layers, resulting in the process stopping short
exposed persons or relative close associates, of true beneficial owners who are natural persons.
originate from high-risk jurisdictions, operate Companies are required to exercise reasonable
high-risk business or have adverse criminal or measures to identify the beneficial owners
media records. through an understanding of the ownership and
control structure of the customer. Therefore,
2. Customer due diligence they must rely on supporting documents, such
The designated non-financial businesses and as constitutions, directors’ resolutions, minutes
professions sector must conduct due diligence of meetings, charters, trust deeds, partnership
on clients, business partners or other entities agreements, joint venture agreements and others.
Author bio with whom the company engages especially in Companies are also required to obtain nine
Muhamad Nazri Shaidon financial transactions. This due diligence is part data points on the beneficial owner as follows:
is Head of AML Advisory
and Training at various of the process of anti-money laundering and ● Name
Law Enforcement countering the financing of terrorism to ensure ● Identity card number/passport number
Agencies in Malaysia. He
that the company is not unwittingly involved in ● Residential and mailing address
is also a Certified Financial
Investigator (AML/CFT). money laundering activities. Companies must ● Date of birth
● Nationality
● Occupation type Enforcement actions
● Name of employer or nature of self- These are examples of enforcement actions taken by the Central Bank of
employment/nature of business Malaysia.
● Contact number
● Purpose of transaction TNG Digital Sdn Bgd (TNGD): TNGD was found guilty of failure to
conduct sanctions screening on the names of its customers, and of failure
to ascertain and make further inquiries that its customer matched with
5. Sanction screening the United Nations Security Council Resolutions List or the Minister of
Businesses are required to conduct sanctions Home Affairs Domestic List. It contravened the Financial Services Act
screening on existing, potential or new customers 2013 s 48(1)(a), read together with the Anti-Money Laundering and
against the United Nations Security Council Countering Financing of Terrorism and Targeted Financial Sanctions for
resolution list and domestic list. These state the Financial Institutions policy document. TNGD was fined RM 600,000.
names and particulars of specified/designated (18 May 2023)
entities as declared by the United Nations MPI Generali Insurans Berhad (MPGB): MPGB was found guilty of
Security Council or Minister of Home Affairs, as failure to conduct sanctions screening before onboarding new customers.
part of the customer due diligence process and It contravened the Financial Services Act 2013 s 48(1)(a) and was fined
ongoing due diligence. RM 260,000. (29 December 2022)
Mandiri Remittance International Sdn. Bhd: Mandiri Remittance was
For customers who are legal persons, reporting
found guilty of failure to identify and verify the beneficial owners for the
institutions are required to screen the name of the
remittance transactions. It contravened the Money Services Business Act
customer; i.e. among but not limited to companies, 2011 s 74(3) and fined RM 134,400. (12 April 2022)
bodies corporate, foundations, partnerships, Takaful Ikhlas Family Berhad: Takaful Ikhlas was found guilty of failure
associations and other similar entities, as well to conduct sanctions screening and failure to flag high-risk customers’
as the beneficial owners; i.e. directors and certificates under the Islamic Financial Services Act 2013 s 58(1)(a) and
shareholders, including nominees, against the fined RM612,000. (7 October 2022)
sanctions lists. Wawasan Ilham (M) Sdn. Bhd: Found guilty of failure to conduct
Businesses are required to ascertain that customer due diligence under the Money Services Business Act 2011
potential matches are true matches and not false s 74(4) and fined RM151,200. (1 March 2022)
positives. It is their responsibility to take further
Source: Central Bank of Malaysia website:
measures or steps (e.g. make further inquiries for
www.bnm.gov.my/enforcement-actions-regulatees
additional information) to determine whether the
potential match is a true match.
Upon confirmation of sanctioned entities and/ By taking a proactive and comprehensive
or related parties, they are required to reject a approach to strengthen its framework, Malaysia
potential customer, block transactions (where can demonstrate its commitment to combating
applicable) to prevent the dissipation of the funds, money laundering and terrorist financing during
and report a suspicious transaction report to the the mutual evaluation process.
Central Bank of Malaysia (BNM).
Central Bank of Malaysia enforcement
6. Training and capacity building action in 2023
Non-financial businesses and professions may be The Central Bank of Malaysia (Bank Negara
involved in training employees, especially those in Malaysia) is the competent authority that
key positions, to recognise and address potential regulates and coordinates anti-money laundering
money laundering risks. This includes being and countering the financing of terrorism in
aware of red flags and suspicious transactions Malaysia. When a central bank issues a serious
and behaviour. warning regarding enforcement actions, it
● Technology and innovation: Embrace typically indicates that there may be non-
technological solutions to enhance anti-money compliance or serious violations within the
laundering and countering the financing of financial system that need to be addressed.
terrorism measures. Implement advanced Enforcement actions can include penalties, fines,
analytics, artificial intelligence and other regulatory measures or other interventions to
innovative tools to detect and prevent financial ensure compliance with financial regulations and
crimes more effectively. maintain the stability of the financial system.
● Continuous monitoring and evaluation: These actions may be taken concurrently
Establish a system for continuous monitoring with, and are separate and distinct from, criminal
and evaluation of measures. Regularly assess proceedings that are under the sole purview of the
the effectiveness of policies and procedures, Attorney General. The designated non-financial
make necessary adjustments and address businesses and professions sector should take
emerging risks promptly. lessons learned from the enforcement action
taken by the Central Bank of Malaysia. ●
Linda shares insights into her motivations, challenges and the pivotal
moments that have shaped her career to date.
Can you tell our readers what inspired you What attracted you to join the AIA and
to become an accountant? And the journey latterly to take on the role of AIA Vice
you have taken to achieve your goals so President?
far? My decision to join the AIA was twofold. Firstly,
Well, I certainly didn’t take a standard route it was to formalise my interest in accounting, and
into accountancy, if there is such a thing? secondly, as a management accountant I found
I left school with A levels in the late 1970s, the AIA’s topic focus highly relevant to my work
a time when the conventional career paths for at the time. I believed, and still do, that a broad
women were relatively limited to roles such as base of knowledge is crucial for a successful
nursing and working in a bank. Uninterested in accounting career, and AIA provides that
these options, I spent over a decade working in a knowledge platform.
variety of roles across the civil service and NHS. Becoming a council member and subsequently
While working at the NHS, I realised my Vice President has been a real honour and for
interest in television, so when an opportunity me an opportunity to offer a unique and fresh
as an assistant accountant in the finance perspective to the council. As a woman who has
department at the BBC arose, I seized it. This never worked in practice, I saw an opportunity to
marked the beginning of my accounting journey provide valuable insights for accountants beyond
and a 15 year tenure at the BBC followed. It the confines of traditional practice spheres. My
was during this time that I made the decision to goal was and still remains to be a catalyst for
formalise my accounting skills, leading me to join change, contributing a distinctive viewpoint to
AIA and undertake my professional accountancy shape the AIA’s trajectory in a more inclusive and
qualifications. diverse direction.
I believed,
Following my time at the BBC I further and still do,
broadened my skill set, undertaking senior finance Can you share with our readers what that a broad
roles within both the banking and insurance skills you feel have made you a successful base of
sectors, before eventually returning to the accountant?
television industry. Understanding business is paramount. While
knowledge
Then out of the blue six years ago, a unique technical proficiency is essential, the ability is crucial for
opportunity presented itself when two former to work collaboratively, share information a successful
BBC colleagues approached me to join their newly and seek the best outcomes for the business accounting
formed business startup as the Finance Director. is equally vital. Soft skills, such as effective
Some would say a big risk, but I truly felt passion communication and influencing, play a
career,
for the project and believed in the founder’s vision. significant role. and AIA
We have witnessed phenomenal growth in the Being able to adapt and use these skills provides that
intervening six years, becoming a leading Natural to drive positive outcomes for oneself, the knowledge
History programme maker employing 140 staff company and the professional organisation is
with turnover exceeding £30 million. absolutely key.
platform.
A
business and reserved legal activities (such as
probate). Unless you and your firm are authorised in
Ian Waters
Compliance for IA members, like anyone else, these areas, you must be aware of the risk of straying
Accountants Ltd must comply with the law. But into them and thus fundamentally breaching the law.
as professional accountants, For example, you might not even realise when you
that obligation is underpinned are going beyond your role as executor of a deceased
by the requirements of the client’s estate or undertaking regulated activities
International Ethics Standards specified under the Financial Services and Markets
Board for Accountants (IESBA) Code of Ethics Act 2000. Sometimes, our wish to help our clients
(as adopted by AIA) with which all AIA members – especially those we have known for a long time –
must comply. can lead us to overlook the fact that our relationship
In particular, the fundamental ethical principle is a professional one, and we are not authorised to
of Professional Behaviour requires a member provide services in certain areas.
to ‘comply with relevant laws and regulations
and avoid any conduct that the professional What are your statutory obligations?
accountant knows or should know might discredit Understanding the limitations on what you can do
the profession’. So I am keen to remind you of without needing authorisation within a statutory
your obligations under UK law, although the time framework might be something you need to research
and space available in this article won’t allow me further. In this article, I can only focus on your
to cover all those obligations in detail. ‘general practice’ legal obligations. I should, of course,
determines the purpose and means of processing the the price (if it has been pre-determined) and the
data; a processor simply processes data on behalf general terms and conditions of the practice; and
of a controller, in accordance with their instructions. ● the contractual terms, if any, concerning the
Guidance on the ICO website sets out how to identify competent courts or the law applicable to the
who is determining the purpose and means of contract.
processing the personal data.
This is important because if your practice is, in This information may be provided in a number
fact, using a data processor (perhaps where a third of different ways, including your practice’s website,
party is processing a client’s payroll), your practice is brochures, factsheets, letterhead, etc. However,
responsible for the processor’s compliance. You must you should be clear (and confident) about where
ensure that your contract with the data processor will you provide this information. In my opinion, your
enable you to meet your data protection obligations. standard engagement letter is the best means of
You must also be clear about your clients’ rights demonstrating compliance.
and those of other individuals whose personal data Further information must be provided if a client
your practice holds. For example, a data subject’s right (or potential client) requests it, namely:
of access means, in effect, their right to copies of that ● the basis for calculating your fees where a fixed
data. A ‘subject access request’ can be quite disruptive fee arrangement has not been offered;
for any small business, so it makes sense that personal ● if you are providing services regulated by
data held is kept to a minimum. (Your employees statute, the professional rules applicable in the
must be trained on the risks of retaining personal data UK and how the client may access them; and
unnecessarily.) ● details of any codes of conduct to which your
practice is subject.
Provision of Services Regulations 2009
Your practice is required to provide specified Handling complaints
information to its clients and those wishing to become Advising your clients at the outset of how they
clients. In effect, the appropriate means of providing would be able to complain, if necessary, is not only
much of the required information is by way of an a requirement of the Regulations, but a matter
engagement letter, although further information must of professionalism. It demonstrates your respect
be supplied if requested by the client. for high technical and ethical standards. But the
Information provided must be clear and Regulations go beyond the provision of information
unambiguous. You must inform all clients (and and set out how your practice must react to a
potential clients) of where they may send a request for complaint from a client. You must respond to a
information about your services (or a complaint about complaint as quickly as possible, and use your ‘best
the service). Unsurprisingly, those details must include: efforts to find a satisfactory solution’ (unless the
● the name of the practice; complaint is vexatious).
● its postal address and/or email address; A practice would be expected to have processes
● its telephone number; and in place to ensure that reasonable complaints
● its official address (such as a registered office), receive the attention they deserve and are not
where relevant. (deliberately or inadvertently) put to one side.
Stress busting
techniques
Muhammad Bilal shares some tips on how accounting professionals can
improve their wellbeing and strengthen their mental health.
S
Muhammad Bilal
Accountant, M B Dean
tress is inherent in many reports and other financial ad hoc tasks that
Accountants professions, including accounting, require timely completion. Challenges can
and can be found in many aspects often arise from the need for accountants to be
of the job. Accountants can suffer organised and work effectively and efficiently.
from intense pressure due to Stress levels can also increase due to the
ongoing tax deadlines, year-end complexities of accounting and the ongoing
challenge of being familiar with new regulations
and tax laws. Accountants must make sure that
they keep up to date with compliance issues, which
can pose a significant challenge for smaller firms or
sole practitioners with limited resources.
The pressure to ensure financial accuracy
and meet tight deadlines can take a toll on
both mental and physical health. As a result,
‘corporate stress’ is increasingly becoming
a condition of significant concern in the
corporate accounting and financial sector.
In this article, we will explore a range
of stress-busting techniques tailored
specifically for accounting professionals,
emphasising the importance of mental
health and overall wellbeing. Here are
my eight top tips for you to consider and
incorporate into your workflow.
Top tip
Prioritise tasks, set realistic deadlines
and break down complex projects into
manageable steps.
INTERNATIONAL
respond to heightened public concerns UK AND IRELAND assessment around these services rather
about ethical behaviour in tax planning than specifically prohibiting them.
in light of high-profile revelations about The FRC notes that a significant
tax avoidance schemes in several FRC updates the Ethical Standard number of consultation responses
jurisdictions in recent years. for Auditors referred to issues that are matters of
The final provisions establish an government policy rather than decisions
ethical framework in the public interest The Financial Reporting Council (FRC) that can be taken by the FRC. These
to guide professional accountants has published an update to its Ethical include the impact of the non-audit
in making judgments and decisions Standard for auditors, effective from service fee cap for auditors of public
when providing tax planning or related 15 December 2024. interest entities and how it might impact
services. Pending certification by the The FRC’s update does three main on assurance, including sustainability
Public Interest Oversight Board (PIOB), things: and climate information produced by
the final pronouncement is expected to ● First, the FRC has simplified the companies. The FRC will share this
be issued by mid-April 2024. existing ethical standard and feedback with the Department for
provided additional clarity in a Business and Trade.
Strategy and Work Plan 2024- limited number of areas to respond Alongside the revised Ethical
2027 to helpful feedback from auditors. Standard, the FRC has also
The IESBA voted to approve its ● Second, the new standard takes into released guidance for auditors on the
Strategy and Work Plan (SWP) account recent revisions made to the application of the Objective, Reasonable
for 2024-2027. Among other international IESBA Code of Ethics. and Informed Third Party test, which
matters, the IESBA will tackle two This aligns the UK with international forms a key part of many requirements
new ambitious strategic areas of standards and helps to ensure that in the Ethical Standard.
focus: accountancy firm culture and high standards of independence Mark Babington, Executive Director
governance; and extending the impact and ethical behaviour are applied of Regulatory Standards at the FRC
of the Code beyond the accountancy consistently by UK audit firms and said: ‘The revised ethical standard has
profession, where it believes it can their networks. been simplified to ensure auditors are
significantly expand reach and business ● Third, the FRC has added a clear as to the high ethical standards
impact. new targeted restriction on fees expected, while the limited number of
Throughout 2023, the IESBA has from entities related by a single new requirements are proportionate and
responded vigorously to the challenges controlling party. This is in response balanced to support trust and confidence
of ethics in the accountancy profession to issues identified through FRC in UK corporate reporting and audit
and beyond. The IESBA’s 2024 agenda audit inspection and enforcement and in doing so helping to support UK
will focus on final approvals of the cases. growth and competitiveness.’
sustainability-related standards,
as well as on new workstreams In line with the FRC’s growth duty,
addressing accountancy firm culture the FRC is mindful that high standards FRC publishes annual review of
and governance, and independence of governance, audit and financial competition in the audit market
considerations regarding the audits of reporting underpin confidence in
collective investment vehicles, pension financial markets and contribute to the The Financial Reporting Council (FRC)
fund arrangements and investment UK’s ability to attract global capital. High has published an updated overview of
company complexes. quality ethical standards for auditors competition in the UK’s audit market for
‘The global shift of governments, enhance trust in the quality of financial public interest entities (PIE).
companies and investors towards a information that drives investment in While the report shows a small
more sustainable future will not happen the UK. This is balanced with ensuring increase in market share for challenger
with good intentions and soft targets,’ that any requirements are targeted and audit firms, the audit market remains
said IESBA Chair Gabriela Figueiredo proportionate. highly concentrated. The Big Four
Dias. ‘This movement will require hard Following feedback to the FRC’s accounting firms continue to dominate,
ethics to realise sustainability goals earlier consultation, it has amended earning 98% of FTSE 350 audit fees
and mitigate the risks of wrongdoing. its proposals to ensure that the in 2022, resulting in limited choices for
The IESBA’s new and proposed revisions requirements in the standard are better businesses and ongoing concerns about
to the Code and the Board’s strategy targeted and proportionate. For example, resilience.
will help ensure that professional additional requirements in respect of Over the past year, and with a focus
accountants and other sustainability ethical breach reporting by audit firms on addressing concerns in the quality
assurance practitioners adopt the to the regulator have been removed as of PIE audits among smaller firms, the
necessary ethical approaches to foster it would be likely to drive inconsistent FRC has pursued a range of initiatives
transparency, relevance and public reporting behaviours. With regard to targeting different aspects of market
trust within the reporting sphere tax services provided to the controlling competition. These include publishing a
while supporting global sustainability shareholders of unlisted companies, the standard for audit committees in relation
efforts.’ FRC is enhancing the independence risk to their role on the external audit,
launching the FRC’s Scalebox to assist the assessment of good repute of the disclosures about a public company’s
smaller firms’ entry in the PIE audit members of the credit servicers organs. segment expenses would enable them
market, and exploring barriers to growth to develop more decision-useful financial
for smaller audit firms. Legal basis and next steps analyses,’ stated FASB Chair Richard
Looking ahead, the report highlights The Non-Performing Loans Directive Jones.
the FRC’s intention to conduct market (Directive (EU) 2021/2167) establishes ‘It will improve financial reporting
studies (in-depth investigations) that a Union-wide framework for both by providing additional information
can generate proposals to improve the purchasers and servicers of non- about a public company’s significant
way the market functions with particular performing credit agreements issued segment expenses and more timely and
regard to better choice and resilience. by credit institutions, whereby credit detailed segment information reporting
This will allow the FRC to explore servicers should obtain authorisation throughout the fiscal period.’
issues relating to the audit market in from and be subject to the supervision The amendments in the ASU
more detail, generating more granular of competent authorities. Credit improve reportable segment
information about areas of concern and servicers must ensure that their disclosure requirements primarily
suggested actions to address them. management or administrative organs through enhanced disclosures about
The FRC invites continued meet the suitability requirements at all significant segment expenses. The key
engagement and feedback from times, including where the business amendments:
stakeholders and welcomes views on the activities or the composition of the ● Require that a public entity disclose,
update and future market studies. organ change. on an annual and interim basis,
The EBA has developed these significant segment expenses that
Guidelines in accordance with are regularly provided to the chief
EUROPE Article 5(2) of the Non-Performing operating decision maker (CODM)
Loans Directive, which mandates the and included within each reported
Authority to issue Guidelines on the measure of segment profit or loss.
EBA publishes guidance to adequate knowledge and experience ● Require that a public entity disclose,
assess the knowledge and of the management or administrative on an annual and interim basis,
experience of the management or organ of credit servicers to conduct the an amount for other segment
administrative organ of a credit business in a competent and responsible items by reportable segment and
servicer manner, to further harmonise the a description of its composition.
assessment of the adequate knowledge The other segment items category
The European Banking Authority (EBA) and experience of the management or is the difference between segment
has published its final Guidelines on administrative organ, as a whole, within revenue less the significant
the assessment of adequate knowledge the EU financial sector. This is in line expenses disclosed and each
and experience of the management or with the requirements under Article 16 reported measure of segment profit
administrative organ of a credit servicer of the EBA founding Regulation. or loss.
as a whole, under the Non-Performing The EBA Guidelines will apply to ● Require that a public entity provide
Loans Directive. The Guidelines aim at credit servicers and to Competent all annual disclosures about a
ensuring that the organs are suitable Authorities across the EU. reportable segment’s profit or
to conduct the business of the credit loss and assets currently required
servicer in a competent and responsible by FASB Accounting Standards
manner. UNITED STATES Codification Topic 280, Segment
To protect the integrity of the market Reporting, in interim periods.
and promote trust, it is crucial to ensure ● Clarify that if the CODM uses more
that the management or administrative FASB issues new segment than one measure of a segment’s
organ of a credit servicer, as a whole, reporting guidance profit or loss in assessing segment
has sufficiently good repute and performance and deciding how to
adequate knowledge and experience to The Financial Accounting Standards allocate resources, a public entity
conduct the business in a competent and Board (FASB) has issued a final may report one or more of those
responsible manner. Accounting Standards Update (ASU) additional measures of segment
The Guidelines specify the criteria that improves disclosures about a profit. However, at least one of the
for the assessment of the organs’ public entity’s reportable segments and reported segment profit or loss
collective knowledge and experience. addresses requests from investors and measures (or the single reported
This will be performed based on the other allocators of capital for additional, measure, if only one is disclosed)
individual members’ assessment by more detailed information about a should be the measure that is most
credit servicers, taking into account reportable segment’s expenses. consistent with the measurement
the principle of proportionality. The ‘The new segment reporting guidance principles used in measuring the
Guidelines also spell out the assessment is based on the FASB’s extensive corresponding amounts in the
process by credit servicers and outreach with stakeholders, including public entity’s consolidated financial
competent authorities, which also covers investors, who indicated that enhanced statements.
● Require that a public entity discloses beginning after 15 December 2024. facilitate greater inter-agency
the title and position of the CODM For other entities, the amendments are coordination, MAS will introduce
and an explanation of how the effective for annual periods beginning several enhancements to its
CODM uses the reported measure(s) after 15 December 2025. Early adoption investigative powers under the SFA
of segment profit or loss in is permitted for annual financial and the FAA, and amend the IA, PS
assessing segment performance and statements that have not yet been Act, TCA and the FSMA to broadly
deciding how to allocate resources. issued or made available for issuance. align the investigative powers under
● Require that a public entity that The ASU, including more information the other Acts with those under the
has a single reportable segment about transitioning to the new standard, SFA and FAA.
provides all the disclosures required is available at www.fasb.org.
by the amendments in the ASU and 2. Clarify applicability of MAS’s
all existing segment disclosures in reprimand powers: Currently,
Topic 280. ASIA PACIFIC under the SFA, FAA and TCA, MAS
may reprimand a ‘relevant person’
The ASU applies to all public entities (which refers to financial institutions
that are required to report segment Singapore’s Financial Institutions regulated by MAS under those Acts
information in accordance with (Miscellaneous Amendments) or employees, officers, partners or
Topic 280. All public entities will be Bill 2024 representatives of such regulated
required to report segment information financial institutions), whom MAS is
in accordance with the new guidance Minister of State, Ministry of Culture, satisfied to be guilty of misconduct.
starting in annual periods beginning Community and Youth and Ministry of The FIMA Bill makes it clear that
after 15 December 2023. Trade and Industry, Mr Alvin Tan, on MAS’s powers under those Acts
behalf of Deputy Prime Minister and allow MAS to reprimand a person
Minister-in-charge of the Monetary who was a ‘relevant person’ at the
FASB issues standard that Authority of Singapore (MAS), time of the misconduct, even if the
enhances income tax disclosures Mr Lawrence Wong, has moved the person has ceased to be a ‘relevant
Financial Institutions (Miscellaneous person; since the misconduct;
The Financial Accounting Standards Amendments) Bill 2024 (FIMA Bill) for i.e. the person is no longer regulated
Board (FASB) has issued an Accounting First Reading in Parliament. by MAS or has left the employ of a
Standards Update (ASU) that The FIMA Bill enhances and regulated financial institution.
addresses requests for improved rationalises MAS’s investigative,
income tax disclosures from investors, reprimand, supervisory and inspection 3. Expand MAS’s powers to issue
lenders, creditors and other allocators powers across various Acts under MAS’s directions to capital markets
of capital (collectively, ‘investors’) that purview. These Acts are: Financial services licence holders that
use the financial statements to make Advisers Act 2001 (FAA); Financial conduct unregulated business:
capital allocation decisions. Services and Markets Act 2022 (FSMA); CMSL holders may conduct
‘The new standard responds to calls Insurance Act 1966 (IA); Payment unregulated businesses such as
from investors for more transparent, Services Act 2019 (PS Act); Securities offering products that are not
decision-useful information about and Futures Act 2001 (SFA); and Trust regulated by MAS (e.g. bitcoin
a company’s income taxes,’ stated Companies Act 2005 (TCA). futures and other payment token
FASB Chair Richard Jones. ‘It requires The Bill also includes miscellaneous derivatives traded on overseas
enhanced disclosures primarily related amendments to certain Acts under exchanges), which may pose
to existing rate reconciliation and income MAS’s purview which are: consequential contagion risks to their regulated
taxes paid information to help investors from the introduction of new processes; activities. The FIMA Bill will
better assess how a company’s clarificatory or technical in nature; now allow MAS to issue written
operations and related tax risks and tax and meant to update the provisions directions on the minimum
planning and operational opportunities or remove certain administrative standards and safeguards that
affect the company’s tax rate and constraints. should be in place when CMSL
prospects for future cash flows.’ MAS has conducted public holders and their representatives
The ASU improves the transparency consultation on the key amendments in conduct unregulated businesses.
of income tax disclosures by requiring: the FIMA Bill. Comments received have
consistent categories and greater been incorporated, where appropriate, 4. Enhance supervisory and
disaggregation of information in the rate into the FIMA Bill. Amendments have inspection powers: MAS will
reconciliation; and income taxes paid been made to four key areas, which are enhance its supervisory and
disaggregated by jurisdiction. It includes briefly described below. inspection powers under the SFA,
other amendments to improve the FAA and TCA to ensure that it has
effectiveness of income tax disclosures. 1. Enhance MAS’s investigative consistent powers across these Acts
For public business entities, the powers: To strengthen MAS’s and to align with the Banking Act
standard is effective for annual periods evidence-gathering powers and 1970.
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