Solving the Puzzle of Cross-Border Expansion with AML and KYC Compliance

image of puzzle piece hanging from top of photo. Image text reads: Solving the Puzzle of AML and KYC Compliance.

In the global business landscape, expansion is a delicate and complex process, akin to assembling an intricate puzzle with numerous interlocking pieces. Each component in cross-border expansion contributes to the broader picture of success.

However, much like assembling a challenging puzzle, navigating the multifaceted landscape of Asia Pacific (APAC) markets requires the alignment of crucial components — regulatory compliance, adaptability and efficiency. For businesses, particularly financial organizations, Know Your Customer (KYC) and Anti-money Laundering (AML) regulations serve as the key pieces that bind the expanding operations, helping businesses expand and thrive amidst the diversity and complexity of the APAC region.

Cross-Border Expansion in APAC

The Asia Pacific region stands at the epicenter of rising cross-border expansion. As one of the fastest-growing economic regions, it is also reaching an inflection point in intra-regional payments. As a result, APAC is expected to reach a total of US $216 billion in global cross-border payments by 2026. Additionally, the geographical proximity of countries within the region has effectively turned digital payments into a catalyst for this transformation. This is especially true considering that consumers continue to make overseas purchases from regional e-commerce platforms such as Alibaba, Shopee and Lazada. Consequently, in ASEAN countries alone, digital payments are projected to reach nearly US $2 trillion by 2025.

The allure of APAC’s dynamic economies, increased purchasing power and technological innovations are evident. Whether it’s the potential of increased revenue, new customer base, diversification opportunities or existing demand, businesses are looking to scale up. Hence, it’s no surprise that 84% of businesses planned to expand their operation into APAC in 2022.

To that end, countries in the region are enticing businesses to expand their operations and establish regional headquarters. Hong Kong is actively working to position itself as the premier fintech hub. As part of InvestHK, a government department dedicated to promoting foreign direct investment, a specialized fintech team has been created to attract the world’s top innovative fintech companies, encouraging them to set up and expand their businesses in Hong Kong. At the same time, the city has also implemented a robust regulatory framework to bolster its industry.

Likewise, Singapore is proactively fostering tech expansion and has signed memoranda of understanding with several APAC countries to boost fintech trade and investment flows. Concurrently, it has also tightened its regulatory requirements, granting increased powers to the Monetary Authority of Singapore.

With each market having its own unique set of requirements, businesses must be meticulous in navigating their path to maintain compliance while seizing the region’s economic opportunities.

Understanding the KYC and AML Landscape in Diverse APAC Markets

Just as the placement of each puzzle piece initiates the formation of the complete picture, KYC and AML compliance initiate a process of business growth for financial institutions. Despite regional countries undertaking stricter steps to strengthen their KYC and AML measures, which include common elements like customer due diligence (CDD) and enhanced due diligence (EDD), the region has a multifaceted regulatory landscape, with each country maintaining its unique and nuanced compliance requirements. As such, businesses must not only comprehend the regulations, but also recognize the subtleties that set each one apart. The right compliance practices ensure steady expansion while keeping operations secure and compliant.

Countries in the region are also revamping their eKYC (Electronic Know Your Customer) requirements to embrace the growing use of digital IDs. In the early part of the year, the Philippines’ central bank, Banko Sengtral ng Pilipinas amended its existing CDD requirements to include eKYC rules detailing the use of its national ID, PhilSys, during customer onboarding. Additionally, Bank Negara Malaysia has also issued an Exposure Draft outlining proposed enhanced requirements for integrating eKYC solutions during customer onboarding. This update considers technological advancements since the issuance of their existing eKYC policy three years ago.

Given the diverse blend of regulatory components, it is essential for businesses to seek an expert who can assemble the intricacies like a seasoned puzzle solver — a flexible and adaptable supplier who can piece together and shape their cross-border expansion strategy for a successful launch in various markets.

Embracing Potential of Virtual Assets

Another factor propelling the region to the forefront of cross-border expansion is the rise of virtual assets. Consequently, APAC is projected to dominate the digital asset management market, capturing nearly 35% of the market share. Notably, countries such as Indonesia have seen a 1,000% increase in transaction volume of virtual assets, while the Philippines boasts a 15% ownership rate, with nearly 11 million Filipinos owning digital assets. Hence, it’s not surprising that within the region, emerging markets such as Vietnam and the Philippines have generated strong appeals in virtual assets like cryptocurrencies, blockchain, tokenization and more.

While some countries have adopted a welcoming stance toward Virtual Asset Service Providers (VASPs), others have taken a more cautious yet receptive approach. However, regardless of their regulatory frameworks, countries universally require VASPs to comply with AML/KYC regulations, including the implementation of eKYC processes — similar to their traditional financial counterparts.

Given the continuous evolution of regulatory compliance measures, establishing flexible and scalable eKYC systems can place companies ahead of the curve. Instead of playing to catch up, they can focus on improving conversion rates and streamlining transactions, while avoiding substantial fines and reputational loss.

Therefore, it is crucial to collaborate with a third-party eKYC vendor that possesses global coverage and expertise to ensure cross-border compliance and effectively expand operations.

Piecing Together Success

Though assembling a complex puzzle involves numerous steps and factors, achieving success in the diverse and dynamic APAC is straightforward. It is as simple as taking one step — forming a partnership with a knowledgeable and trusted supplier offering industry-leading KYC solutions for financial organizations while adhering to AML compliance.

Jumio’s KYX Platform is a powerful solution that empowers businesses to expand effectively through the incorporation of advanced automation and AI, simplifying the process of identity verification and compliance. Contact us today to start a conversation about how we can help you put together the right solution for your company.


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