Asia (Other)

By Danh Nguyen

In this rapidly evolving area of the law, it can often be difficult to keep track of all the new regulations being issued by the different regulators in the region. To stay competitive and ahead of competitors, payment service providers (PSPs) need to have a sound understanding of the regulatory environment in Asia Pacific. We highlight six important considerations that PSPs should be aware of when operating in these markets:

 

  1. No one size fits all – While the regulatory frameworks for payment services in APAC are generally founded on some common principles, the laws, rules and regulations may differ materially from one country to the next. Some regulate through specific payment services laws, others do so through funds transfer or money remittance business laws, others again do it through existing banking and finance laws and regulations, or a combination of these. Inside knowledge of local market nuances are important.  It’s prudent to seek advice and guidance from advisors with local knowledge, experience and expertise.  This helps to protect your business against the downside risks of being non-compliant or over-regulated.
  1. Complexity and uncertainty of regulatory regimes – When operating in or entering a new market in APAC, don’t expect for all the applicable laws, rules and regulations to be clearly drafted and neatly captured in a single main piece of legislation and supplementary legislation (e.g. regulations) … or to be in English for that matter. In some countries, in addition to the main statute, there are a myriad of subordinate rules, regulations, circulars, decrees, notifications, guidelines, etc. that can be difficult to find and fully understand. Poor translations, limited to no guidance notes on implementation, or the confusion arising from the unclear relationship between different rules and regulations, all compound the uncertainty and complexity.  Again, inside knowledge here becomes key to accessing the regulatory framework for each jurisdiction.  Understanding how the relevant central banks and authorities interpret and approach payment services is vital.
  1. Audit your business and products/services against applicable laws/regulations – Undertake a thorough review/audit of your business model, products, services and operations against the applicable laws and regulations in relevant markets to understand if your business or products/services are subject to any licensing, registration, permit or authorisation requirements. Just because your business has not been regulated in the past does not mean that that situation would remain unchanged. Due to the emergence of new technologies, regulators are taking a more aggressive and proactive approach, so there’s a need to keep up to date with the latest developments in the payments regulatory landscape.  Missing a change can be a very costly mistake.  Services such as Payments Compliance, assist PSPs to stay up-to-date with some regulatory changes and developments, as well as guidance from your payment expert advisors.
  1. AML/CTF compliance considerations – In the payments space, it’s more than likely that your business and products/services may be subject to applicable Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF) laws and related laws and regulations (e.g. requirements around customer due diligence (KYC), transactions monitoring, PEP screening, etc). In recent years we have seen large fines and penalties (often in the $100’s of millions of dollars) being meted out to banks and other financial services institutions for compliance failures. Having in place a robust compliance and risk management programme is a must. As your business grows, having in place effective compliance and risk management controls becomes even more critical. Indeed, the bedrock of any well-run payments company is a well-constructed and thoughtfully created compliance programme, with an effective and appropriately resourced compliance function tasked with overseeing it.
  1. Exemptions and exceptions – Even if your business or products/services are subject to licensing requirements, check to determine if you can benefit from any exemptions or exclusions that may be available under applicable laws or regulations or through market practice as determined by the local regulators. You may have to make some adjustments to your business model or operations or processes but being able to take advantage of any exemptions can save your business a lot of time, effort, resources and money. The compliance and administrative burdens of having to maintain a licensed entity can be rather onerous and should not be underestimated. In addition, there’s also the legal, financial and reputational risks if you don’t manage to comply with your licence conditions and/or the regulatory requirements that apply to your licensed
  1. Effective government relations engagement strategy – In markets where the regulatory environment can be challenging for foreign companies to operate in (e.g. most countries in the SEA region), it’s important for PSPs wanting to operate in these markets to develop and have in place an effective public affairs and government relations engagement plan and strategy. Such a strategy can help the company to develop productive relationships with the local authorities and position the company for success down the track if it decides to apply for certain licences or permits in the country. In this part of the world, don’t underestimate the power of relationships and of the need to engage in constructive dialogue with the regulators.

Danh NguyenDanh is the EMEA General Manager & Managing Consultant of KorumLegal and an experienced general counsel with over 18 years of global commercial practice experience across banking/financial services/payments and IT/technology and outsoucing sectors. He has worked in global listed companies and in private practice on a wide range of matters including general commercial, remittances and payments, financial services regulatory, AML/CTF, business advisory and strategic risk and compliance. He has advised on and led efforts to successfully apply for remittance and payments licences in a number of jurisdictions across Asia Pacific. He brings the diversity of his experience to the KorumLegal management team in leading large transformation initiatives, using Lean Management principles, tools and practices to drive organisational, operational and cultural change, including Legal Process Management.

danh.nguyen@korumlegal.com

https://www.korumlegal.com/

Related Articles by Firm
Don’t suffer FOMO* for Southeast Asia LegalTech!
Avoid the 'fear of missing out' by embracing the incredible opportunities technology offers.
Accessing new markets in APAC – Essential questions you must ask!
New market opportunities in this region are immense, but there are challenges.
How technology drives managed legal services
Managed legal services are an increasing area of focus for consumers and are starting to make significant inroads into Asia and APAC.
Creating value in law. Is it time to Stop, Collaborate and Listen?
To ensure that we’re creating excellence, we need to think, without distraction, of the bigger picture.
A journey from traditional working practices to a flexible workplace
Policies that let employees work remotely can improve productivity and reduce staff turnover.
Innovation in legal services: What it is and how we do it
To begin the innovation journey, we should first understand what we are talking about.
Managed legal services: part of a new paradigm for the legal solutions market
The emergence of alternative legal solutions is giving clients a lot more choice.
Your first 10 days as a legal consultant
The challenges facing legal consultants are unique and require a different set of skills to other employees.
Nobody's got time for that! General counsel and legaltech
How to overcome the lack of time, resources and knowhow needed to implement technology solutions.
Law as a process
How process design defines value, delivers efficiency and drives business strategy.
Lifting the veil on payments
Payments companies need to understand and comply with many complex laws and regulations.
Do you have what it takes? Successful, flexible careers for lawyers
KorumLegal takes a look at the type of lawyers and consultants it works with and the appeal of NewLaw.
Related Articles
The New Normal: An interview with LOD’s head of innovation and design
We speak with Anthony Wright about the development of lexvoco, joining forces with LOD and the future of legal in Asia.
Don’t suffer FOMO* for Southeast Asia LegalTech!
Avoid the 'fear of missing out' by embracing the incredible opportunities technology offers.
Regulating the sale and provision of digital content through mobile cellular networks
The regulation is becoming more relevant as investors are increasingly interested in the digital content market.
Related Articles by Jurisdiction
Shipping & Insurance
Turning the lens on the plight of ship owners on what can only be described as despondent times in the industry, our inaugural Shipping & Insurance issue features a cover story which carves out four of the biggest ...
The evidence collector that’s always with you
It is an integral part of our life these days and an item that is rarely further than arm’s reach ...
Asset searches in the digital age
Social media and other technology are changing the way asset searches are conducted in a dispute ...
Latest Articles
The New Normal: An interview with LOD’s head of innovation and design
We speak with Anthony Wright about the development of lexvoco, joining forces with LOD and the future of legal in Asia.
Don’t suffer FOMO* for Southeast Asia LegalTech!
Avoid the 'fear of missing out' by embracing the incredible opportunities technology offers.