MONEY LAUNDERING AND TERRORIST FINANCING RISKS FACING HONG KONG’S FINANCIAL INSTITUTIONS AND PAYMENT SYSTEMS

The Hong Kong government has published a report detailing the money laundering (ML) and terrorist financing (TF) risk assessment of Hong Kong. This follows the recommendations of the Financial Action Task Force (FATF) that jurisdictions identify and assess their ML/TF risks and apply mitigating measures, and is a pre-cursor to the FATF’s onsite evaluation of Hong Kong’s ML/TF safeguards, scheduled to take place this autumn.

The report examines the ML/TF threats and vulnerabilities facing Hong Kong as a whole as well as specific sectors. The key aspects of the report are highlighted in our e-bulletin of 4 May 2018. In a follow-up e-bulletin (please click here to access), we provide an overview of the report’s findings in relation to financial institutions and payment systems.

Among others, the Securities and Futures Commission, the Hong Kong Monetary Authority and the Insurance Authority have issued circulars to alert the entities under their purview of the report and provide guidance.

 

William Hallatt
William Hallatt
Head of Financial Services Regulatory, Hong Kong
+852 2101 4036
Vicky Man
Vicky Man
Senior Associate, Hong Kong
+852 2101 4243
Jackie Lam
Jackie Lam
Associate, Hong Kong
+852 2101 4194

GROUP-WIDE AML/CTF COMPLIANCE: NEW OBLIGATIONS FOR FIRMS WITH OVERSEAS BRANCHES AND SUBSIDIARIES?

In December 2017, the European Supervisory Authorities published a Report on draft Joint Regulatory Technical Standards (“RTS“) on the measures that credit and financial institutions should take to manage money laundering risk in their non-EU overseas branches and subsidiaries. The RTS focusses on the measures that EU firms must adopt when local law prevents their branches and subsidiaries sharing information with them for anti-money laundering purposes. To date, the draft RTS has received little attention, but it is potentially of significant importance to firms with branches and subsidiaries in non-EU jurisdictions with strict banking secrecy or data privacy requirements, as it may require them to adopt new monitoring strategies and arrangements. In this briefing we summarise the background to and requirements of the draft RTS. Continue reading

Corporate Crime update – December 2017

 

Welcome to the December 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

UK GOVERNMENT INTRODUCES NEW SANCTIONS AND ANTI-MONEY LAUNDERING BILL

On 19 October the UK Government published the text of a proposed new Sanctions and Anti-Money Laundering Bill (the “Bill”), which seeks to create a post-Brexit domestic legislative framework for the imposition and enforcement of sanctions. The introduction of the Bill follows the publication on 2 August of the Government’s response to the consultation on the UK’s future legal framework for sanctions (see our previous blog post).

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Corporate Crime Monthly Update – August 2017

Welcome to the August 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.

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Government proceeds with proposals to enhance Hong Kong regulations on anti-money laundering and counter-terrorist financing

In 2018, Hong Kong's regime will be subject to mutual evaluation with those of other members of the Financial Action Task Force (FATF). FATF sets international standards for anti-money laundering and counter-terrorist financing regulation and reviews the effectiveness of regulation in member countries. The Government is keen to ensure that Hong Kong's rating is not adversely affected. It is proceeding with proposed changes to bring Hong Kong's regulatory regime in line with FATF’s standards in time for its mutual assessment.

The Government has issued a combined consultation conclusions paper on its two consultation papers issued in January 2017 setting out proposals to (i) enhance the transparency of beneficial ownership of Hong Kong companies and (ii) to extend the customer due diligence (CDD) and relevant record-keeping requirements to designated non-financial businesses and professions (DNFBPs).

Across the board, there was general support for the Government's proposals. Save for some amendments discussed below, the Government is planning to take the proposals forward and introduce amendment bills into the Legislative Council by July 2017.

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Hong Kong SFC urges intermediaries to review compliance with AML/CFT requirements following identification of deficiencies

On 26 January 2017, the Securities and Futures Commission (SFC) issued a circular (with Appendix 1, Appendix 2 and Appendix 3) highlighting its concerns regarding compliance by licensed corporations (LCs) and associated entities (AEs) with anti-money laundering and counter financing of terrorism (AML/CFT) requirements.  The circular sets out the deficiencies and inadequacies in intermediaries' AML/CFT policies, procedures and controls (AML/CFT systems) identified by the SFC in the course of its routine and thematic inspections conducted in 2016.  To assist intermediaries, the SFC has further set out some examples of good practices which LCs and AEs are encouraged to consider adopting.

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Corporate Crime Monthly Update January 2017

Welcome to the January 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.

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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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