Weekly Update on Global Trends: Stricter Regulations, Risk Mitigation, and Cross-Border Cooperation

1. The Financial Action Task Force (FATF) advised financial institutions in India to strengthen due diligence measures on the bank accounts of domestic politicians, government officials and their families. Previously, the FATF rated India as only partially compliant with bank scrutiny of local PEPs. Going forward, one may expect financial institutions to have a more rigorous monitoring of the source of funds in the accounts of domestic PEPs and, perhaps, a greater degree of involvement of senior bank managers to approve any new accounts for the above-mentioned parties.

2. The Mekong Club, a non-profit organization that works with the private sector to address modern slavery risks, issued a report advising financing institutions on risks, typologies and recommendations to address modern slavery risks. Estimated to deliver USD 150 billion in profit, corporates contributed approximately USD 350 million to anti-human trafficking programs, which is just 0.23 percent of the resources amassed by traffickers.

3. A recent New York Fed study examined the impact of US sanctions on Tornado Cash, a cryptocurrency mixer on the Ethereum blockchain. The study found that while the sanctions had an immediate effect, causing declines in Tornado Cash’s governance token and user diversity, net flows eventually recovered. Notably, non-cooperation with the sanctions was driven by philosophical reasons rather than monetary gain, with the paper highlighting vulnerabilities in Ethereum’s censorship resistance and emphasizing the importance of regulatory clarity following a court ruling.

4. Indonesia’s Financial Services Authority (OJK) signed an MOU with the Hong Kong Monetary Authority (HKMA) to enhance cooperation in banking supervision. The agreement aims to establish a supervisory college and strengthen staff capacities through knowledge exchange and training. The partnership covers information exchange, AML/CFT, crisis management, and capacity building, further solidifying the relationship between the two regulators.

5. Macau officials have proposed a law that would criminalize unauthorized currency exchanges in casinos and their connected facilities, with penalties of up to five years in prison and a 2-10 year casino ban. This move follows a coordinated crackdown with mainland China on illicit money exchanges that help gamblers bypass capital controls. The proposal comes amid broader efforts to curb illegal gambling activities, including a recent high-profile murder linked to these operations, and marks the latest step in Macau's push to tighten its gaming regulations.

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