On 16 October 2017, the Hong Kong Monetary Authority (HKMA) introduced by way of a circular new measures to heighten management accountability at Registered Institutions (RIs) for conducting or supervising the conduct of businesses that constitute regulated activities (RAs). These measures are detailed in a set of FAQs accompanying the circular.

This clarification is not unexpected given questions raised around how the Securities and Futures Commission’s (SFC) Manager in Charge (MIC) regime would be harmonised with the regime administered by the HKMA under section 72B of the Banking Ordinance (please see our briefing on the MIC regime here). However, the new guidance will require RIs to consider their existing governance frameworks and amend where appropriate to ensure full compliance with the HKMA’s expectations.

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Filed under Hong Kong, Regulatory Reform

Dealing with a dawn raid in Hong Kong

Surprise inspections by governmental authorities are on the rise. Any company in any sector may be on the receiving end and obstructing a lawful raid is a criminal offence.

Therefore, it is essential to be prepared. Front line staff such as Reception and Security, through to the IT team, business units, legal counsel and management, need to know how to react and what information to provide.

Drawing on our experience, we have published a guide to help deal with a raid by any of the key authorities in Hong Kong. It provides step-by-step help with all aspects of a raid, as well as checklists of powers and duties, and a series of “golden rules” to follow. Since the guidance is practical, much of it can be deployed regardless of the jurisdiction and authority in question.

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Filed under Hong Kong, Investigations


President Trump has repeatedly criticised the ‘Iran deal’, referring to it as an ‘embarrassment’ for the United States. On 13 October 2017, he laid out new strategies his administration is taking concerning Iran. In a speech delivered at the White House, he also announced that his administration will not certify Iran’s compliance with the Joint Comprehensive Plan of Action (“JCPOA”). Such a step raises the spectre of sanctions being reimposed and may well disrupt foreign direct investment in Iran. Continue reading

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Filed under Announcements, Sanctions and Money Laundering, US

Increased focus on board and senior management in Hong Kong as HKMA issues enhanced guidance on corporate governance

On 6 October 2017, the Hong Kong Monetary Authority (HKMA) issued a circular to announce the publication of two revised Supervisory Policy Manual (SPM) modules, namely CG-1 “Corporate Governance of Locally Incorporated Authorised Institutions” and IC-1 “Risk Management Framework”. Revisions were made to the modules to incorporate guidelines issued by the Basel Committee on Banking Supervision and the Financial Stability Board on corporate governance and risk management principles, thereby bringing Hong Kong more in line with international standards. Continue reading

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Filed under Asia, Hong Kong

OFSI publishes quick guide to financial sanctions

On 4 October 2017, HM Treasury’s Office of Financial Sanctions Implementation (“OFSI”) published a quick guide for UK businesses, with the aim of helping them understand and comply with financial sanctions. The guide is intended to help explain what financial sanctions are, when and how to comply with sanctions, and where to go for further information and guidance.

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Filed under Announcements, Sanctions and Money Laundering

New regulatory trial grounds for FinTech firms in Hong Kong – Regulators announce additional FinTech sandboxes

Last Friday (29 September 2017), Hong Kong financial regulators announced new initiatives aimed at fintech firms, including several new regulatory sandboxes:

  • The Hong Kong Monetary Authority announced plans to launch Fintech Supervisory Sandbox 2.0, an enhanced sandbox that follows on the heels of its Fintech Supervisory Sandbox launched a year ago (further details of which are set out in our e-bulletin here);
  • The Securities and Futures Commission (SFC) announced the launch of a Fintech Regulatory Sandbox and issued further clarification on the meaning of “relevant experience” for responsible officers at fintech firms (see the SFC’s press release here); and
  • The Insurance Authority announced two pilot initiatives – the Insurtech Sandbox and Fast Track.

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Filed under Hong Kong, Regulatory Reform, Sector Updates by Herbert Smith Freehills

Corporate Crime monthly update – September 2017

Welcome to the September 2017 edition of our corporate crime update – our round up of developments in relation to corruption, money laundering, fraud, sanctions and related matters. Our update now covers a number of jurisdictions. For the full update on each jurisdiction, please click on the name of the jurisdiction below. Below we provide a brief overview of what is covered in each update. Continue reading

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Filed under Corporate Crime, Herbert Smith Freehills, Regulatory Reform, Sanctions and Money Laundering

Regulators around the world become more vocal regarding the potential risks associated with ICOs

The rapid rise of initial coin offerings (ICOs) this year has prompted heightened scrutiny by regulators globally. On 4 September 2017, seven major regulators governing the finance and technology sectors in China (collectively, the Chinese Regulators), jointly published an announcement prohibiting ICOs in China.

The following day, the Hong Kong Securities and Futures Commission (SFC) also made a statement on existing regulations which could be applicable to ICOs and explained that digital tokens may be “securities” as defined in the Securities and Futures Ordinance, and accordingly subject to the securities laws of Hong Kong. The SFC also warned investors of the potential risks of ICOs.

The announcement by the Chinese Regulators and the statement by the SFC follow similar clarifications and announcements by regulators in the US, Canada, Singapore, Malaysia, Thailand and Dubai, among other jurisdictions, about their respective positions on ICOs. To date, the Chinese Regulators have been the only ones to issue an outright ban. You can read our e-bulletin on the Monetary Authority of Singapore’s position here.

The UK Financial Conduct Authority also issued a consumer warning on 12 September 2017 stating that “ICOs are very high-risk speculative investments” and investors “should only invest in an ICO project if [they] are an experienced investor, confident in the quality of the ICO project itself (eg, business plan, technology, people involved) and prepared to lose [their] entire stake”.

In our recent e-bulletin, we highlight the key points in the announcement by the Chinese Regulators and the statement by the SFC and set out our observations on the future of ICOs. If you wish to discuss this further, please do not hesitate to reach out to our Greater China team (the contact details of which are set out in the bulletin) or your usual Herbert Smith Freehills contact.

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Filed under Announcements, Asia, Regulatory Reform

Conclusions released on the revamp of Hong Kong’s regulatory structure for decision making in listing related matters

The Hong Kong Stock Exchange (Stock Exchange) and the Securities and Futures Commission (SFC) have jointly announced their consultation conclusions on proposals to revamp the regulatory structure for making decisions in listing related matters. The June 2016 consultation (summarised in our earlier bulletin) generated considerable negative market feedback resulting in a change of approach by the SFC and Stock Exchange. The consultation conclusions modify the original proposals, taking account of the views raised.

The originally proposed Listing Policy Committee is to be replaced with the Listing Policy Panel (LPP) with the same remit to advise on listing policy with broader regulatory and market implications. The LPP will be formed by a memorandum of understanding between the SFC and the Stock Exchange rather than being a committee under either of them.

The proposal to introduce a Listing Regulatory Committee responsible for deciding, and providing guidance on, listing applications and matters relating to suitability or broader policy concerns has been dropped. However, the SFC has, in tandem, modified its approach to its role in regulation to separately achieve a greater involvement in the decision making process. This approach was made public in a recent speech by the SFC’s Chief Executive Officer, Ashley Alder, and in the its new Regulatory Bulletin launched on the same day.

In our recent bulletin, we briefly examine the proposals being taken forward by the SFC and the Stock Exchange. If you wish to discuss this further, please do not hesitate to reach out to our Hong Kong team, the contact details of which are set out in the bulletin.

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Filed under Announcements, Hong Kong, Regulatory Reform

UK Government’s future Partnership Paper on Foreign policy, defence and development: including proposals for co-operation on sanctions, cyber security, and the defence and security industries

The UK Government has released a Paper outlining the UK’s proposals for a future partnership with the EU regarding foreign policy, defence and development. The Paper highlights the UK’s shared interests and values with the EU regarding foreign policy and defence, and the UK Government’s offer and intention to work closely with the EU in the future in a partnership “unprecedented in its breadth”, and that is deeper than any other third country relationship. The Paper offers a number of insights into the practical ways in which the UK envisages that such cooperation will be achieved after Brexit, including in relation to sanctions, cyber security, defence and security, development and broader foreign policy. Continue reading

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Filed under Announcements, Europe