Hong Kong government launches two consultations on legislative proposals to enhance regime for combatting money laundering and terrorist financing

Earlier this month, the Hong Kong government launched two consultations on legislative proposals aimed at bringing Hong Kong in line with international standards for combatting money laundering and terrorist financing.  With a mutual evaluation of Hong Kong’s regime with other members of the Financial Action Task Force (FATF) looming in 2018, the government is keen to ensure that Hong Kong’s regime aligns with the FATF’s standards.  The consultations will last for two months and will end on 5 March 2017.  Subject to the views and comments received, the government aims to introduce the proposed reforms into the Legislative Council in the second quarter of 2017.

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Filed under Hong Kong

Potential reform of corporate criminal liability for economic crime

On 13 January 2017 the Ministry of Justice ("MoJ") published a call for evidence ("CfE") regarding potential reform of the law concerning corporate criminal liability in respect of economic crime. This publication is the latest development concerning a potential new offence of failure to prevent economic crime, which was first announced by David Cameron in May 2016.

The purpose of the CfE is to enable the MoJ to obtain evidence as to whether reform of the law of corporate criminal liability is required, and if so, what form this should take.  If the government determines that reform is required following the CfE then the next stage will be a full consultation on a detailed proposal and draft legislation – likely to take place sometime in the summer of 2017.  The changes that may result from this process have the potential to be very significant for corporates, and the fact that there will be full consultation and scrutiny of the proposals is welcome, including the opportunity to engage at this early stage by responding to the CfE.

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Filed under Bribery and Corruption, Consultations, Corporate Crime

HKMA issues guidance on empowerment of independent non-executive directors of Hong Kong-incorporated authorised institutions

In its recent circular, the Hong Kong Monetary Authority provided further guidance on the empowerment of independent non-executive directors (INEDs) in the banking industry in Hong Kong, following an industry consultation carried out in early 2016.  The guidance examines, amongst other things:

  • the role of INEDs;
  • the expected practices of locally incorporated authorised institutions (HK-Incorporated AIs) with regard to INEDs; and
  • proposed measures to be taken by HK-Incorporated AIs to ensure that there are sufficient suitably qualified people willing to serve as INEDs on the boards of HK-Incorporated AIs.

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Filed under Asia, Hong Kong

US OFAC issues guidance on sanctions compliance services

New guidance issued by the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) clarifies that U.S. attorneys, compliance personnel, and others are not prohibited from providing services related to compliance with U.S. sanctions laws, even where sanctions would otherwise prohibit U.S. persons from direct or indirect involvement in the underlying business activities.  To read more from our CC&I team, click here.

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Filed under Americas, Corporate Crime, Sanctions and Money Laundering, US

New corporate governance standards for Hong Kong authorised insurers came into effect on 1 January 2017

In October 2016, the Office of the Commissioner of Insurance (OCI) revised the Guidance Note on the Corporate Governance of Authorised Insurers (Revised GN10).  Under Revised GN10, the OCI not only enhanced the minimum standards of corporate governance that are expected of authorised insurers, but also widened the scope of application of such standards.

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Filed under Hong Kong, Insurance

SFC issues further guidance on suitability obligations – the cornerstone of investor protection

As foreshadowed in the Consultation Conclusions on the Proposed Amendments to the Professional Investor Regime and Further Consultation on the Client Agreement Requirements issued by the Securities and Futures Commission (SFC) on 25 September 2014, the SFC has conducted a detailed study (including the gathering of industry views) of the requirement under paragraph 5.2 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code) that persons licensed by or registered with the SFC (collectively, Intermediaries) should, when making a recommendation or solicitation, ensure the suitability of the recommendation or solicitation for the client is reasonable in all the circumstances (Suitability Requirement).

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Filed under Asia, Hong Kong

New US Cyber Security sanctions targeting Russia

On 29 December 2016, President Obama signed an Executive Order entitled "Taking Additional Steps To Address The National Emergency With Respect To Significant Malicious Cyber-Enabled Activities".  In an official statement, President Obama said that the Executive Order was issued "in response to the Russian government's aggressive harassment of U.S. officials and cyber operations aimed at the U.S. Election".

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Filed under Corporate Crime, Non-UK regulation, Russia, Sanctions and Money Laundering, US

SFC announces “Manager in Charge” regime to heighten senior management accountability for financial institutions in Hong Kong

In its recent circular (with annexes 1 and 2 and a set of FAQs), the Securities and Futures Commission (SFC) of Hong Kong introduced new measures to heighten the accountability of the senior management of all licensed corporations (LCs). The circular clarifies who should be regarded as the senior management of a LC and requires the LCs to designate fit and proper individuals to be “Managers In Charge” of certain Core Functions (MICs, MIC Regime).

The SFC's increased focus on senior management accountability is part of a global trend to make it easier for regulators to hold individuals to account, and comes following the recent introduction of the Senior Managers and Certification Regime in the UK. While the SFC emphasises that the MIC Regime does not impose any additional civil or criminal liability on the senior management of LCs, individuals must consider carefully whether they should be appointed as MICs and, if so, what their responsibilities for the designated Core Function are.

Breakfast Seminar – 10 January 2017

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Filed under Asia, Hong Kong

EU prolongs duration of Russian sectoral sanctions until July 2017

On 19 December 2016, the European Council announced that the EU's sectoral sanctions, targeting the Russian financial, energy and defence sectors, and dual-use goods (which were previously due to expire on 31 January 2017) will be extended for a further six months until 31 July 2017. This extension was effected by Council Decision (CFSP) 2016/2315 of 19 December 2016 (the "Decision"), amending Council Decision 2014/512/CFSP. The Decision came into force on 21 December 2016.

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Filed under Russia, Sanctions and Money Laundering, Uncategorized

Hong Kong SFC confirms enforcement priorities and approach following strategic review

In its recently relaunched Enforcement Reporter newsletter (see first issue), the Securities and Futures Commission (SFC) has confirmed that corporate fraud and misfeasance, anti-money laundering, Growth Enterprise Market companies and multiple intra-group failings are issues high on its agenda and will be pursued as a priority, as part of its shift towards a more targeted approach to enforcement.

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Filed under Hong Kong, Sanctions and Money Laundering