SFC proposes to implement revisions to AML/CFT guidelines on 1 November 2018 ahead of FATF Hong Kong evaluation

On 5 July 2018, the Securities and Futures Commission (SFC) issued a consultation paper on proposals to amend the Guideline on Anti-Money Laundering and Counter-Terrorist Financing (Main Guideline) and the Prevention of Money Laundering and Terrorist Financing Guideline issued by the Securities and Futures Commission for Associated Entities (Guideline for AEs). Comments on the proposals are required to be submitted by 9 August 2018.

This is one of many initiatives taken by the Hong Kong government and the financial services regulators (including the SFC) in recent years to enhance the anti-money laundering and counter financing of terrorists (AML/CFT) regime in Hong Kong, in light of the upcoming evaluation of the regime by the Financial Action Task Force (FATF). Other initiatives include, for example, supervisory circulars such as the SFC’s circular of January 2017 highlighting AML/CFT deficiencies identified in inspections (see our briefing here), SFC and Hong Kong Monetary Authority (HKMA) enforcement actions over AML/CFT breaches (see our briefing on some of the 2017 actions here), the recent government report detailing the money laundering and terrorist financing (ML/TF) risk assessment of Hong Kong (see our briefing here), and legislative changes to expand the AML/CFT regime to various types of non-financial businesses and professions.

The proposed amended Main Guideline is set out in appendices 5A and 5B of the consultation paper (marked-up and clean versions). A summary of the proposed amendments to the Main Guideline (on a chapter by chapter basis) is provided in appendix 1 of the consultation paper. A marked-up version of the proposed amended Guideline for AEs is in appendix 6 of the consultation paper.

Following the consultation period, the SFC aims to finalise the guideline amendments by early October 2018 and implement the revised guidelines on 1 November 2018, around the time of the FATF onsite visit to Hong Kong scheduled for October/November 2018.

In addition, late last week, the SFC also issued a circular to provide more flexibility to paragraph 5.1 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct) with regards to online client onboarding.

Please click here to read our full briefing.


William Hallatt
William Hallatt
Partner, Head of Financial Services Regulatory, Hong Kong
Email | Profile
+852 2101 4036
Hannah Cassidy
Hannah Cassidy
Partner, Hong Kong
Email | Profile
+852 2101 4133

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Filed under Announcements, Bribery and Corruption, Consultations, Corporate Crime, Hong Kong, Regulatory Reform, Sector Updates by Herbert Smith Freehills

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