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Synopsis
Financial inclusion denotes banks’ provision of basic financial services at affordable costs to individuals and enterprises that need and qualify for them. The opposite is financial exclusion in which the bank denies financial services to customers that it considers as high money laundering and terrorist financing risks, giving rise to the term ‘de-risking’.
Financial inclusion is a sensitive issue with strong social and economic implications, having thus drawn local and international attention. Locally, the litany of financial exclusion reports compelled the Hong Kong Money Authority (HKMA) to issue a circular to banks on September 8, 2016 to warn about the dangers of screening out too many potential customers because the resulting de-banking of some customer groups could potentially harm Hong Kong’s economy as well as its reputation as one of the world’s leading international financial centres, known for its business-friendly environment and ease of doing business. Internationally, at the G20 Leaders Communique Hangzhou Summit, the G20 leaders advocated for financial inclusion to encourage entrepreneurship. The Financial Action Task Force (FATF) also recommended for financial inclusion and thus required banks to take the risk-based approach by accepting customers commensurate to banks’ exposure to risk, with the ultimate goal of increasing access to banking facilities.
Financial inclusion is widely perceived as a form of civil rights because individuals without access to basic financial services can face challenges of social marginalisation. Correspondingly, owners of business enterprises are asserting their civil rights too, as they face increasing difficulties opening bank accounts in Hong Kong, forcing them to put their plans on hold or take their business elsewhere. As the problem of financial exclusion deteriorates, regulators and interest groups are addressing it with public policy concerns.
Financial exclusion is driven by the onerous anti-money laundering/countering the financing of terrorism (AML/CFT) documentary requirements or banks’ fear of regulatory reprisals. Stereotypically, banks refuse to accept applications for bank account opening by some customer groups, with small and medium-sized enterprises (which is the backbone of Hong Kong’s economy) and start-up companies (which is a new economic power for enhancing Hong Kong’s economic future) and foreign companies being most affected.
The presentation will address the following key issues: (1) the importance of financial inclusion since it has strong social and economic implications; (2) the claim that financial technology (FinTech), a portmanteau of finance and technology, including blockchain and automated suspicious transaction monitoring technology systems, enables financial inclusion; (3) the problem of financial exclusion which is linked to AML/CFT requirements; and, consequently, considers (4) whether the AML/CFT requirements are suitable to be put into a regulatory sandbox, a new regulatory approach whereby innovative FinTech products or services will be provided with regulatory flexibility for them to be introduced and tested in the market, and, if not, whether there is an alternative approach to grant regulatory flexibility so as to make financial services more accessible—the essence of financial inclusion. In this connection, regulatory technology (RegTech) is a new derivative of FinTech used by regulators to enhance regulatory compliance by financial institutions.
Speaker
Please refer to attached CV and bio for details.
Event Details
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Date:
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13 November 2017 (Monday)
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Time:
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2.00pm to 3.30pm
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Venue:
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SMU School of Law
Meeting Room 5.04, Level 5
55 Armenian Street
Singapore 179943
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Registration
This is an invitation-only event. Please register by 8 November, Wednesday.
We look forward to seeing you at the job talk seminar.
With warm wishes
School of Law
Singapore Management University
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