WHAT ARE THE
Money laundering and terrorism financing laws in Hong Kong?
In Hong Kong, money laundering is a serious offence and is regulated primarily under the money laundering and terrorism financing laws are primarily governed by the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (AMLO) and its associated regulations. These laws aim to prevent and detect money laundering, terrorist financing, and other financial crimes by imposing obligations on certain entities who are required to establish clear and comprehensive AML policies that outline their commitment to combating money laundering and terrorism financing:
WHAT ARE THE
Key obligations that reporting entities have under Hong Kong laws?
The key obligations under the AMLO include:
- Customer due diligence (CDD) - these are measures to verify the identity of their customers and includes obtaining and verifying customer identification documents and assessing the risk associated with each customer.
- Reporting of suspicious transactions - where entities are obligated to report any suspicious transactions or activities that may be related to money laundering or terrorist financing to the Joint Financial Intelligence Unit (JFIU)
- Transaction and cross-border reporting - where entities are required to report certain types of financial transactions, such as cash transactions over a specified threshold and cross-border movement of physical currency or bearer negotiable instruments.
- Compliance programs - where entities must establish and maintain comprehensive AML/CFT compliance programs including enterprise-wide ML/TF risk assessments, internal policies and procedures, staff training, and ongoing monitoring to ensure compliance with the law.
- Record-keeping - where entities must maintain adequate records of customer identification, transactions, and business relationships and retain them for periods specified within the regulations.
WHO ARE THE
ML/TF regulators in Hong Kong and what functions do they perform?
In Hong Kong, the regulators responsible for combating money laundering and terrorism financing are primarily:
- Financial Services and the Treasury Bureau (FSTB) - the FSTB is a government agency responsible for formulating and implementing policies and legislation related to the financial services industry in Hong Kong and plays a key role in coordinating and overseeing anti-money laundering and counter-terrorism financing (AML/CTF) efforts.
- Hong Kong Monetary Authority (HKMA) - the HKMA is the primary regulator of banks and other authorised financial institutions in Hong Kong. It supervises and ensures compliance with AML/CTF regulations within the banking sector.
- Securities and Futures Commission (SFC) - the SFC is the regulatory authority overseeing Hong Kong's securities and futures markets. It has the responsibility of regulating and enforcing AML/CTF measures within the securities and investment industry.
- Insurance Authority (IA) - the IA is the regulator of the insurance industry in Hong Kong. It oversees compliance with AML/CTF requirements within the insurance sector.
- Customs and Excise Department (C&ED) - the C&ED is responsible for enforcing customs, excise, and AML/CTF laws related to cross-border movements of goods and currencies.
- Hong Kong Police Force (HKPF) - the HKPF plays a crucial role in investigating and combating money laundering and terrorism financing offences in Hong Kong and.collaborates with other regulatory bodies and intelligence agencies to address financial crimes.
Hong Kong authorities actively cooperate with international counterparts in combating money laundering and terrorism financing involving sharing information, cooperating on investigations, and providing assistance to other jurisdictions when requested
WHAT ARE THE
Industry sectors subject to ML/TF regulations?
In Hong Kong the main industry sectors that are regulated include:
WHAT ARE THE
Penalties for non-compliance with AML/CTF laws?
In Hong Kong, the penalties for non-compliance with money laundering and terrorism financing laws can vary depending on the specific offence committed and the relevant provisions violated. Here are some potential penalties that may apply:
- Criminal offences - serious breaches of anti-money laundering (AML) and counter-terrorist financing (CTF) obligations can be considered criminal offences, leading to criminal charges and potential imprisonment. Criminal penalties can include fines and imprisonment terms of varying lengths depending on the offence.
- Monetary Penalties - the Hong Kong Monetary Authority (HKMA), which oversees the banking sector, has the power to impose monetary penalties on financial institutions for non-compliance with AML/CTF requirements and specific penalties can vary based on the severity of the offence and the institution involved.
- Regulatory Actions - regulatory authorities, including the HKMA and the Securities and Futures Commission (SFC), have the authority to take enforcement actions against non-compliant financial institutions or individuals and can include issuing fines, imposing restrictions on business activities, or revoking licences.
WHAT ARE THE
Largest fines for non-compliance with AML/CTF laws?
The regulatory authorities in Hong Kong have shown they willing to take action for non-compliance with AML/CFT laws and has used their enforcement powers including:
- Westpac Banking Corporation, Hong Kong Branch (31 January 2023)
- Cathay United Bank Company, Limited, Hong Kong Branch (23 September 2022)
- Commerzbank AG, Hong Kong Branch (26 August 2022)
- 33 Financial Services Limited (14 January 2022)
- ePaylinks Technology Co., Limited (20 December 2021)
- China Construction Bank (Asia) Corporation Limited (19 December 2021)
- CTBC Bank Co., Ltd., Hong Kong Branch (19 December 2021)
- Industrial and Commercial Bank of China (Asia) Limited (19 December 2021)
- UBS AG, Hong Kong Branch (19 December 2021)
- JPMorgan Chase Bank, National Association, Hong Kong Branch (28 December 2018)
- Shanghai Commercial Bank Limited (17 August 2018)
- Coutts & Co AG, Hong Kong Branch (11 April 2017)
- State Bank of India, Hong Kong Branch (31 July 2015)