In 2018, a Hong Kong government report says money laundering puts the city at “medium high” risk, with the banking sector risk labelled “high.” This cited its strong legal system, political commitment to the issue, and cooperation between the public and private sectors.
Legal and compliance has had a golden decade since the 2008 financial crisis. While the majority of those working in finance have laboured under cutbacks and stiff capital requirements, their headcount and clout has grown. The plethora of regulations, covering everything from capital and corporate governance to disclosure and diversity has led to financial institutions bulking up their workforce.
HSBC, which was fined $14.9 billion HKD in 2012 for banking Mexican drug money, has around 5,000 employees in anti-money-laundering (AML) compliance. Standard Chartered, which has coughed up $14.1 billion HKD for breaches of sanctions, has 3,500. Both banks spend $3.91 trillion HKD a year on AML alone - for Standard Chartered, the equivalent of a fifth of its pre-tax profit for 2018. At the end of 2018, some 30,000 (or 15%) of the 204,000 employees of Citigroup, worked in compliance, risk and other control functions – enough to fill more than five Hong Kong Stadium. Compared to 2008, where just over four percent of employees worked in legal and compliance.
In a complex regulatory landscape, professionals who ensure their employer plays by the rules of an ever-changing game are in high demand. A global study of risk and compliance officers at 800 financial firms in 2018 found that 43% expected their team to grow in the next 12 months. However, according to Angus Young, a specialist in regulation, governance and compliance who teaches at Hong Kong Baptist University, Hong Kong suffers from a lack of qualified specialists, especially at non-banks such as local securities firms as well as at regulators, who are capable of analysing complex transactions amid the toughened compliance and risk requirements.