Corporate Crime update – Autumn 2019

Welcome to the Autumn 2019 edition of our corporate crime update – our round up of developments in relation to corruption, money laundering, fraud, sanctions and related matters. This bumper edition covers a number of jurisdictions, and includes content from the summer break.

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The new regulatory regime for insurance intermediaries in Hong Kong – are you ready for 23 September 2019?

On 23 September 2019, the new statutory regime for the regulation of insurance intermediaries will take effect.

This represents the final stage of implementation of the insurance reforms which established the Insurance Authority (IA) as Hong Kong’s independent insurance regulator. The IA assumed the regulatory responsibilities of the Office of the Commissioner of Insurance in June 2017 and will take over the regulation of insurance intermediaries (agents and brokers) from the three self-regulatory organisations (SROs) on 23 September 2019. On the same day, the requirements relating to the intermediary management function, one of the control functions of an authorised insurer, will also come into effect.

The IA will be responsible for all aspects of regulation of insurance intermediaries, including issuing rules, codes and guidelines, approving licences, monitoring compliance, conducting inspections and investigations, and imposing disciplinary sanctions where breaches have occurred.

In the lead-up to 23 September 2019, authorised insurers and insurance intermediaries should conduct a final review (if they have not already done so) to ensure that they are ready to comply with all relevant requirements under the new regime.

In this e-bulletin, we provide an overview of the new rules, codes and guidelines which will apply under the new regime, as well as the transitional arrangements relating to licensing, approval of key persons in the intermediary management control function, and ongoing complaint and disciplinary cases.

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FATF and APG publish long-awaited mutual evaluation report on Hong Kong

Following the Financial Action Task Force (FATF) and the Asia/Pacific Group on Money Laundering’s inspection of Hong Kong in October and November 2018, their much anticipated Mutual Evaluation Report (Report) on Hong Kong was published on 4 September 2019. Our previous bulletin on 25 June 2019 gave early insights into the expected findings.

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Commercial Court considers contractual discretion of bank to close customer account without notice where there is suspicion of money laundering

In a recent decision, the Commercial Court has upheld a financial institution’s decision to exercise its contractual right to close a customer’s accounts and terminate its relationship without notice, where the financial institution had a suspicion that its customer’s accounts were being used for money laundering purposes: N v The Royal Bank of Scotland plc [2019] EWHC 1770. The decision will be welcomed by financial institutions seeking to take action to prevent financial crime occurring through use of accounts provided to customers, under tight time pressure and notwithstanding that the consequences of the bank’s action for the business in question could be severe.

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HKMA rates level of money laundering and terrorist financing risk for SVF sector as medium

Last Friday, the Hong Kong Monetary Authority (HKMA) published its money laundering and terrorist financing (ML/TF) risk assessment report for the stored value facility (SVF) sector in Hong Kong.

The latest assessment confirms that the SVF sector continues to carry a medium level of ML/TF risk.

While the majority of the sector continues to be characterised by lower ML/TF risks (as indicated by the use of SVF products for low value transport and retail transactions), some pockets of higher ML/TF risks have emerged, arising from SVF products with functions such as overseas cash withdrawal and cross-border remittances.

SVF licensees should consider the HKMA’s report, and (where necessary) update their institutional ML/TF risk assessments and enhance their internal systems and controls.

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Moscow Corporate Crime and Investigations Newsletter – July 2019

This newsletter summarises recent Russian regulation, enforcement and court practice developments which may be relevant for doing business in Russia from a corporate crime and investigations perspective.

Additionally, this newsletter spots some US and other relevant developments which should be kept in mind by Russian businesses having foreign parents or operations.

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MAS EXTENDS AML/CFT REQUIREMENTS TO PAYMENT SERVICE PROVIDERS

On 6 June 2019, the Monetary Authority of Singapore (MAS) issued a Consultation Paper on proposed anti-money laundering and countering the financing of terrorism (AML/CFT) requirements which will apply to most payment service providers (PS Providers). Submissions close on 5 July 2019. The relevant AML/CFT requirements are set out in the following Notices (AML/CFT Notices) to be issued by MAS and come after the passing of the Payment Services Act (PS Act) on 14 January 2019 (see our bulletin here):

  1. Notice to Payment Services Providers (Specified Payment Services) on Prevention of Money Laundering and Countering the Financing of Terrorism (applies to all activities that carry money laundering/financing of terrorism (ML/FT) risks except digital payment token (DPT) services); and
  2. Notice to Payment Services Providers (Digital Payment Token Service) on Prevention of Money Laundering and Countering the Financing of Terrorism (applies to DPT services).

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