5 July 2012

Leas Bachatene – Vice President, Managing Director Asia Pacific

Thomson Reuters Governance Risk & Compliance

THE CHALLENGE OF REGULATION AND COMPLIANCE

RULES OF BUSINESS ARE BEING REWRITTEN

THE REGULATORY DELUGE

2

REGULATORY ACTIVITY TRACKED 2010-2011

*Note: Tracked activity includes document changes, announcements, and enforcements by regulators.

COMPLIANCE CHALLENGES WHAT WEALTH MANAGERS NEED TO KNOW

4

THE CONSEQUENCES OF NON-COMPLIANCE

• Increased fines and enforcements

• Reputational damage with clients, prospects, and your market

• Imprisonment and loss of license

Date Institution Agency

Fine/

Imprison

ment

Violation

June

28 Barclays

UK & US

Regulator $ 453M Libor Rate Manipulation

May

30 JP Morgan CFTC TBC Poor Corporate Governance

Oct

2011

Raj Rajaratnam, head

of Galleon Group

hedge fund

DOJ, SEC,

Manhattan

DA

$102.8M

11 yrs

prison

Insider trading

Aug

2010 Barclays PLC

DOJ,

Manhattan

DA

$298M

Facilitated and concealed wire

transfers to and from blacklisted

countries

THE CONSEQUENCES OF NON-COMPLIANCE

• Increased fines and enforcements

• Reputational damage with clients, prospects, and your market

• Imprisonment and loss of license

Date Institution Agency

Fine/

Imprison

ment

Violation

May

2010 Royal Bank of Scotland DOJ $500M

Facilitated and concealed wire

transfers to and from blacklisted

countries

Feb

2010 Daimler AG DOJ, SEC $200M

“Improper payments” in a number

of jurisdictions, including Africa,

Asia, and Eastern Europe

Jan

2009 Lloyds TSB

DOJ,

Manhattan

DA

$350M Falsifying wire transfers destined

for Sudan, Iran and Libya

OVERVIEW ON COMPLIANCE CHALLENGES

• FATCA is what seems to be causing the banks the biggest challenge

• Regulators in Asia are getting a lot tougher about approving wealth management products and looking at the miss-selling procedures in place

• Singapore’s brought in a new code of conduct for private bankers and Hong Kong there are much tougher rules now for structured products

• In the less developed financial centres, there is an issue of regulatory uncertainty and barriers for foreign banks.

• FCPA and UK Bribery Act

• Dodd Frank still a work in progress and still haven’t finalized drafting how the rules will reach overseas. However, those rules and the other new rules on derivative trading coming in across Europe and Asia mean that banks will have a lot of operational work to do to connect all their trading systems up to central clearing houses and trade repositories.

GRC GOVERNANCE, RISK & COMPLIANCE

8

CONNECTING THE GRC BUSINESS COMMUNITY

Connect business strategy, operations and business transactions

to the ever-changing regulatory environment, so firms can go fast

while managing risk.

A CONNECTED GRC STRATEGY

By connecting compliance, audit, risk and legal, organisations can make informed decisions and

accelerate their business while managing risk.

TECHNOLOGY SOLUTIONS

• Regulatory Tracker

• World-Check & Enhanced Due Diligence

• FATCA

• Transaction monitoring /email monitoring

• Compliance Manager

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TRACKER AND POLICY MANAGEMENT SOLUTIONS

– Dynamically link policies to the

underlying rulebooks

– Easily manage version and

hierarchy control

– Enable easy sharing through

intuitive workflow and update

distribution

– Evidence policy adoption

(through RecordKeeper)

SCREENING SOLUTIONS (NEW)

– Initial and on-going screening

against an unrivaled and

unique data set, built by our

own research team

– Ensure client and customer

identity with Electronic Identity

Verification

– Screen for potential risks with

Adverse Media searching

– Understand the risks

associated with Politically

Exposed Persons

– Gain a deeper understanding

of clients, suppliers & partners

in emerging markets

– Monitor transactions

– Screen vessels against

sanctions and enforcements

TRANSACTION MONITORING / EMAIL MONITORING

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COMPLIANCE AS A COMPETITIVE ADVANTAGE

TO DO MORE WITH LESS

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So what are the three things you should do?

• People and expertise

• Culture is probably the most important aspect of

implementing GRC and the board and CEO needs to set

the tone at the top.

• The right expertise, and providing the right training is

critical. One of the most effective ways of improving

governance and compliance quickly is training employees

in the standards expected of them by the company –

• Companies have learned that their employees can be the

largest source of risk, they also learn that changing

employee behaviour is the best way of managing risk and

can be your first line of defence.

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So what are the three things you should do?

• Insist on “Better Information not More Information”

Our mission at Thomson Reuters is to provide better

information. Of those 15,000 regulatory updates that

Thomson Reuters track from 300 regulators around the

world every year (an average of 60 updates) a day, which

is the one that if missed could put your business at risk?

• Standardise processes and better controls around

your risks, prioritising where the largest risks are and

placing standard controls and checks in place – driving

growth whilst ensuring standards are maintained is the

primary goal of any GRC workflow and control tool

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2012 SPECIAL REPORT – THE STATE OF REGULATORY REFORM

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QUESTIONS