October Newsletter

We published the ComplianceAsia October regulatory newsletter today. Here is the editorial:

Below are some details about a recently released anti money laundering tool provided by Deloitte that we thought would be of interest to readers of our newsletter. We have used it and it’s a cost effective and well structured product. Please contact Catherine Chan of Deloitte (Contact Details below) for further details or a demo.

As Singapore firms upgrade their AML processes to be more risk based this tool can help you meet your compliance obligations.

In other news outside the Asian region, AIMA has issued Guidance on Hedge Fund side letter arrangements. In the Sidley Austin Financial Services Regulatory Update and supplement for October 2006, it was highlighted that the FSA is concerned by the lack of transparency and the potential for conflicts of interest with regard to side letters. AIMA issued its guidance note on September 27 in response to the FSA’s concerns. Although AIMA is not a regulatory body, the notes it issues are considered best practice to date.

The guidance note requires the disclosure of side letters that contain material terms by UK firms. The disclosure is not designed to circumvent any individual confidentiality, but rather requires the firm to consider the materiality of the potential holding under the side letter.

There remains some debate over which firms are covered by the guidance note, specifically where the UK firm or branch is a subsidiary of a US firm and therefore would the disclosure be necessary and how far reaching is the requirement.

For more information see www.sidley.com or contact Effie Vasilopoulos at Sidley in Hong Kong.

We expect side letters and transparency issues to be big issues in 2007 for hedge funds.

In Hong Kong, recent press suggests that the SFC will be launching joint inspections with both the SEC and the FSA of hedge funds operating in Hong Kong and registered with either of these regulators. We expect to see additional inspections at locally run operations as well. We also expect to see greater SFC interest in the activities of Hong Kong based prime brokers.

The end of the year is rapidly approaching in Hong Kong and that means its time to make sure those CPT hours are completed. Recent guidance in SFC FAQ’s suggests to us that a harder line will be taken than in previous years on firms whose employees do not meet the ongoing training and competence requirements.

On November 22, ComplianceAsia will be hosting a training session on anti money laundering and the Caribbean led by Duncan Smith from WSmith. Please email idy@complianceasia.com if you would like to attend and have not already registered. The session will count for 1.5hrs of CPT.

We note that the AML legislation in Australia that has been discussed in this column previously has been introduced into the Australian Parliament and should soon become law.