Duff & Phelps Global Regulatory Outlook 2019

Each year, as part of its Global Regulatory Outlook, Duff & Phelps conducts an online survey of financial services executives around the world to get their views on issues on the industry agenda. This year's survey covered anti-money laundering (AML), whistleblowing, technology and budgeting, as well as which city is the current global financial hub and which one is most likely to fill that role in the future—a telling indicator of forces remaking the global financial landscape.

The Global Financial Hub: Brexit and Globalization

As it did last year, our survey closed by asking respondents to choose the city they believe represents the world's financial center today and the one they believe will play that role in five years. Comparing this year's responses to last year's shows the effects of both short-term and long-term global trends. Last year, Brexit cast a shadow of uncertainty over the United Kingdom's economy; it has now escalated to a full-blown crisis. Reflecting this, New York and London have switched places as the share of those choosing London as preeminent dropped from slightly more than half to slightly more than one-third.

Looking ahead, however, globalization's diffusion of influence begins to be apparent: 12% of respondents expect Hong Kong to be the world's preeminent financial center five years from now, a stark contrast to the 3% who held this opinion just a year ago. It is also worth noting that a handful of other cities were named as the global financial capital of the future, including Shanghai (9%), Dublin (4%), Frankfurt (4%), and Luxembourg (3%). While these numbers individually are not statistically significant, collectively they provide further evidence of the combined effects of globalization and Brexit as the financial industry searches for a new EU financial center.

It is not surprising that answers to this question were greatly influenced by the location of the respondent. In this year's survey, 96% of U.S. respondents consider New York to be the world's current financial hub and 76% of UK respondents consider London the hub. But even home-country bias has its limitations: when asked to look ahead five years, the proportion of U.S. respondents who still name New York dips to 78%—while the proportion of UK respondents who say the same about London drops to 44%.

AML: A Call for Stronger Coordination

Governments and institutions around the world devote considerable energy and resources to combat money laundering...