Combating bribery, corruption & money laundering in Southeast Asia

Governments around the world are doing more than ever to combat corruption and money laundering, however, money laundering, bribery and corruption still pose a significant economic, social and legal threat to economies and financial systems worldwide.

SE Asia

A report by Global Financial Integrity, estimates that in 2013 alone, developing countries lost an estimated US$ 1.1 trillion to illicit financial flows – illegal movements of money from one country to another. Effective anti-money laundering measures, in both developed and developing countries, are essential to end these illicit flows.

Looking specifically at Southeast Asia, we have seen various scandals including:

  • 1Malaysia Development Berhad investment fund, which has involved allegations of money laundering and suspicious transactions, as well as the theft of circa US$3.5Billion.
  • In Indonesia, the Great Garuda seawall project, a major infrastructure project that was mired in corruption in bribery allegations, and subsequently cancelled.
  • In Singapore there was a recent case regarding the unreported use of illicit funds to attempt a real estate purchase in Sentosa Cove tied to a major international Ponzi scheme;

This is in addition to various construction projects around the ASEAN region mired by allegations of bribery and corruption within the procurement process, highlighting the need for quick and effective action.

Vulnerability

The built environment sector is particularly vulnerable to these issues; organisations must act collaboratively to stop the problem. RICS has a key role to play in combating money laundering in the real estate sector. This is accomplished by ensuring that RICS professionals and regulated firms have adequate safeguards to prevent them from being used for financial crime and money laundering activities.

RICS has launched a public consultation on a new professional statement (‘Countering bribery and corruption, money laundering and terrorist financing’) to sit alongside national legislation. The professional statement will be mandatory for all RICS professionals (Rules of Conduct for members), regardless of discipline, to help property professionals and regulated firms address these risks.

Roundtable meetings

As part of the RICS consultation, roundtable meetings were held with representatives from international property consultancies, construction companies, project management firms, the legal profession and major global occupiers. These meetings discussed the RICS draft professional statement in the context of local as well as regional issues.

Some of the key takeaways from these meetings were the general lack of awareness of an individual’s legal requirements, particularly when in engaging in cross-border work.  A company’s ownership structure can mean that employees are bound not just by local legislation, but also by that of another country, such as the UK and US, whose legislation has extra-territorial reach.

There was also discussion about how far down the supply chain a firm must go in conducting its due diligence. For example, would it be reasonable for an RICS Regulated project management firm to carry out checks on third tier contractors? A similar question was raised regarding the treatment of clients, and contractors whose subsidiary companies have been found guilty of misconduct. This is something that is not directly referenced within the Professional Statement, but the consultation process gives RICS the opportunity to give such questions due consideration.

Another interesting discussion point was regarding that of gifts, particularly reflecting cultural norms and expectations. For example, in some Asian cultures, the practice of giving gifts such as hampers, or red packets during Chinese New Year is customary, particularly amongst local businesses. As the framework is principle based it allows firms and practitioners to reasonably reflect such cultural and legal differences as required.

By providing practitioners and companies with clear and consistent principles on what constitutes a breach of conduct, the new professional statement promotes professional and ethical behaviour.

Share your views in our consultation

The professional statement, “Countering bribery and corruption, money laundering and terrorist financing”, will apply to all RICS professional disciplines and is global in scope.

Responses are accepted until 31 August.

Read the consultation

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