Financial Crime Trends 2023 in Timor: A Growing Concern

As the global financial landscape continues to evolve, regulatory bodies are stepping up their efforts to combat financial crime. In Timor, a small island nation in Southeast Asia, the threat of financial crime is increasingly becoming a major concern.

Evolving Risks and Challenges

According to KPMG’s report on Ten Key Regulatory Challenges of 2023, regulators will continue to focus on anti-money laundering (AML) and counter-terrorist financing (CTF) frameworks to prevent illicit exploitation of access to the financial system. This includes shell companies, all-cash real estate purchases, and other high-risk transactions.

In Timor, where corruption is a significant issue, regulatory bodies are likely to pay close attention to insider corruption, including employee misconduct and vendor/third-party misconduct. Cybercrime is also becoming an increasing concern, with regulators urging financial institutions to implement robust cybersecurity risk management measures.

Evolving Risks in Timor

The report highlights several evolving risks that regulators will need to address:

• Domestic and international terrorist financing
• Increased focus on OFAC and Sanctions
• Transnational criminal organizations
• Drug and human trafficking, smuggling
• Proliferation financing

Regulatory Focus Areas

In response to these growing concerns, regulatory bodies in Timor are expected to enhance their risk and compliance frameworks for effective oversight and governance. The KPMG report identifies several key areas of focus for regulators in 2023:

Key Areas of Focus

• AML/CFT frameworks and risk mitigants
• Fraud models, operations, and investigation processes
• Insider corruption (employee misconduct, vendor/third-party misconduct)
• Cybercrime and robust cybersecurity risk management

Actionable Steps for Financial Institutions

To effectively combat financial crime, regulatory bodies in Timor will need to stay vigilant and adapt to the evolving landscape. In light of these emerging trends and risks, financial institutions in Timor can take several actionable steps to mitigate their exposure:

1. Add analytics and automation to client onboarding: Implement robust due diligence processes to identify high-risk clients and transactions.
2. Eliminate antiquated technology: Upgrade systems and infrastructure to ensure they are secure, efficient, and compliant with regulatory requirements.
3. Establish a mature conduct risk program: Develop a comprehensive framework for managing conduct risks, including employee misconduct and vendor/third-party risk.

By taking these steps, financial institutions in Timor can better protect themselves against the growing threat of financial crime.