AML Guideline. Process steps already extracted.
Ready for compliance gap analysis, process implementation and health check.
Establishing the Source of Wealth of Beneficial Owners is one of the pre-requisites before continuing a business relationship or establishing a new business relationship, in high risk situations and for politically exposed persons. This one process step is located in 4 different places in the AMLO Schedule 2, and 3 different places in the AML Guideline. One paragraph (4.13.11) in the AML Guideline references 7 different process steps. Extracting the required process steps from the text of the guideline can be a difficult and time consuming task ...
Extract from Process Map
Extract from "Guideline on Anti Money Laundering
and Counter-Terrorist Financing", 27Jan2012

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RMB Business - Requirements on Position Squaring.
Process Steps already extracted.
Ready for Compliance Gap Analysis.
The new regulation explicitly sets out the steps required to assess the genuineness of cross-border trade transactions, including eligibility of trade transactions, third party documentation and compliance checking. There are extra responsibilities and reporting obligations (extra process steps) to document assessments and report to HKMA.
This sample shows part of the regulation and part of the regulation process map. Extracting the process steps from the new requirements is the first part of the compliance Gap Analysis. A difficult and time-consuming task ... already done for you:
Extract from
"RMB Business - Requirements on Position Squaring with the RMB Clearing Bank" 8 November 2011
Extract from Process Map
(click ZOOM OUT to show neighbouring processs steps)
Selling ILAS Products.
Process Steps already extracted.
Ready for Compliance Gap Analysis.
Ensuring Customer Suitability is a complex set of process steps, requiring compliance with several regulations. The customer suitability process has 8 different requirements in HKMA's circular "Enhanced Regulatory Requirement on Selling ILAS Products" of 14 March 2011. AND requirements in HKMA's circular of 25 March 2009 "Distribution of Structured Products Connected to Lehman Brothers". AND requirements in HKFI's "Updated Requirements Relating to Sale of ILAS Products" of 25 January 2011.   Extracting the required process steps from the text across several Regulations is a meticulous and time consuming task ...
Extract from
"Enhanced Regulatory Requirements on Selling ILAS Products" 14 March 2011
Extract from Process Map
(click ZOOM OUT to show neighbouring processs steps)
Implementing Regulations is Difficult
Compliance Units are flooded with regulations – regulators have more manpower dedicated to writing regulations than compliance teams. Even with the accumulation of regulations impacting disparate internal processes, Compliance Teams and Operations teams have the difficult and messy job to determine "What process steps do we have to DO?".

Eventually, regulations must be implemented as internal process steps. Mistakes can have disastrous consequences – even accidental non-compliance. On the other hand, over-compliance means unnecessary operating costs and can choke off business unit revenue streams.
What are Regulation Process Maps ?
How do we use them ?
Regulation Process Maps translate text regulations into financial processes.

With Regulation Process Maps, Compliance and Operations Teams have a head-start advantage: detailed matching regulations to processes. The heavy lifting is already done. Explicitly. The collective intellect of compliance, operations, marketing, products and technology can concentrate on implementing the regulations and maximising profits.
Valuable content to use when implementing regulations. Not commentary.
How to Subscribe ?
for Supervisors and Regulators:
Regulation Process Maps – Existing Regulations
Processes for BIS guidance for developing local regulations from international standards.
for HK Banks:
Regulation Process Maps- New Issue Regulations
Processes for banking regulations issued by HKMA. To identify process CHANGES.
for HK Banks:
Regulation Process Maps – Existing Regulations
Processes for banking regulations issued by HKMA. For internal compliance audit, process reengineering, or setting up a new business unit.
for Securities Regulated Financial Institutions:
Regulation Process Maps- New Issue Regulations
Processes for securities regulations issued by SFC. To identify process CHANGES.
for Securities Regulated Financial Institutions:
Regulation Process Maps – Existing Regulations
Processes for securities regulations issued by SFC. For internal compliance audit, process reengineering, or setting up a new business unit.
Regulation Process Maps help Supervisors and Regulators
implement International standards into localised regulations
As well as the regulatory outcome objective, Supervisors can carefully assess the impact of regulations on institutions’ internal processes. Regulators benefit from using Regulation Process Maps by:

- Design tool during development of regulations.
- Better transparency – guidance notes for implementation.
- Effective communication tool for industry consultation.
- Improved compliance - reduce Institutions’ burden of implementation.
Confidence
Our heritage is over 20 years experience in Business Process Management in Financial Services, Manufacturing and Aviation Sectors. Our clients include retail, investment and private banks, central banks and securities regulators. For more than 10 years Leonard Research and Consulting Limited has diligently advised our clients on internal and external processes, sharing our expertise in Business Process Management. Our production team includes process analysts with banking, banking and insurance operations experience, and consulting on regulator’s and exchange’s internal processes.

Previously we advised a HK financial market regulator on their internal process management. Each process output is considered in a risk-based regulatory framework, where the costs, benefits, public interest and available resources are balanced to achieve the outcomes of a fair and orderly market. Our process expertise provided a valuable framework for assigning resources to the regulator’s internal processes.
Proprietary Methodology
Translating regulations into process maps is not a simple task. Our proprietary methodology applies both accurate analyses of the details, plus synthesis of the big picture process overview. Simultaneously. Our process analysts possess the rare skill-set to operate simultaneously at the detail level and at the big picture level. Our Quality Assurance program confirms the internal consistency vertically, horizontally and externally.
Short Stories
HK regulators for banking and securities have more than 50 staff researching and writing and issuing regulations. In the first 4 months of this year, 22 regulations affecting banks were issued. That is 328 pages of regulations that must be implemented as internal process steps. It is essential to keep up, but it’s not an easy job.

XXX Investment Bank has a dedicated team of three staff inside their Operations Team, working out the internal process steps to comply with regional AML regulations.

XXX Retail and Investment Bank APAC Operations uses Change Leadership to spearhead implementing new regulations in operations and to coordinate across departments. "Change" means process change. Compliance is so overwhelmed that are struggling just to receive and distribute incoming regulations.

XXX Private Bank front line marketing staff have two priorities: 1) protect the bank, and 2) meet the sales targets. All the work of compliance and operations is behind the scenes to. the "front-end" is only interested in training on a new product; what steps are already built into the system; and whether the Platform Manager says it’s OK or not. By the time a new regulation gets to the front line, all the process changes must be already built-in.
At XXX Retail Banking, processes are managed within business units as much as possible. This distributed process management can be very effective for tailoring processes to maximise revenue from target customer segments. Very effective localisation.

UK FSA recognises Process Mapping as a tool for Operational Risk management. In Jan 2011 the UK FSA included Business Process Mapping as a tool to be use to identifying and assessing material risks: "firms identify all the steps within specific business processes or procedures (for example, the life-cycle of booking and settling a trade) to determine where areas of weaknesses might lie. This may result in controls being tightened in these areas." (UK FSA Guidance Note: "Enhancing frameworks in the standardised approach to operational risk". Section 3.22 (ii), January 2011.) Regulation Process Maps can be used not only to quickly implement new regulations, but also to identify operational risks.