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An Overview of Hong Kong’s Anti-Money Laundering & Counter-Terrorist Financing Regime (AML & CTF Regime) Michael YIP Assistant Secretary Financial Services and the Treasury (Financial Services) 30 November 2011. Financial Action Task Force (FATF). Inter-government organization

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Financial action task force fatf

An Overview of Hong Kong’sAnti-Money Laundering & Counter-Terrorist Financing Regime(AML & CTF Regime)Michael YIPAssistant SecretaryFinancial Services and the Treasury(Financial Services)30 November 2011


Financial action task force fatf

Financial Action Task Force (FATF)

  • Inter-government organization

  • 34 members + 2 regional organizations

  • International AML/CFT standard setter

    (40 + 9 Recommendations)

  • Develop and promote policies


Fatf mutual evaluation 2008

FATF Mutual Evaluation 2008

Recognized the strengths of HongKong’s AML/CFT regimes

Also identified areas requiring improvements

- CDD & record-keeping requirements

- enforcement powers of financial regulators

- criminal & supervisory sanctions

- remittance agents & money changers

3


Financial action task force fatf

1989 Drug Trafficking (Recovery of Proceeds) Ord.- 1994 Organized & Serious Crimes Ord.- 2002 United Nations (Anti-Terrorism Measures) Ord.

HK AML & CTF Regime - Overview

- 2011 Anti-Money Laundering & Counter-Terrorist Financing (Financial Institutions) Ord.


Anti money laundering counter terrorist financing financial institutions ord amlo

Anti-money Laundering & Counter-Terrorist Financing(Financial Institutions) Ord. (AMLO)

  • To be effective : 2012-04-01

  • Guiding principles for AMLO :

    - conform with FATF standards

    - compliance cost minimized

    - partnership approach to assist market

5


Scope

Scope

AMLO apply to whom :

- Licensed corporations (by SFC)

- Authorized institutions (by HKMA)

- Insurers, insurance agents & brokers (by OCI)

- Remittance agents & money changers (by C&E)

6


Customer due diligence

Customer Due Diligence

FI is required to :

- identify the customer & verify identity

- identify beneficial owner & verify identity

- understand the purpose & business nature

of the business relationship

When : open account, occasional transaction > $120000, wire transfer > $8000, or suspect/doubt ML

7


Ongoing monitoring

Ongoing Monitoring

CDD up-to-date & relevant

Consistent & risk profile

Identifying transactions

- complex, unusually large, unusual pattern

- no apparent economic or lawful purpose

8


Record keeping

Record-keeping

FIs must keep records of the following for six years :

* documents/information obtained during CDD

* transaction records

9


Proper internal control

Proper Internal Control

FIs to take all reasonable measures

- proper safeguards to prevent contravention

- mitigate ML & TF risk

10


Independent review tribunal

Independent Review Tribunal

Proper procedural safeguards and checks & balances

- S.21 disciplinary sanctions & other specified

decisions of financial regulators

11


Guidelines etc

Guidelines, etc

Financial regulators:-

- to issue AML guidelines, circulars, etc.

- to conduct AML seminars & other briefings

to assist private sectors to comply.

12


Financial action task force fatf

Gatekeeper

Role of Financial Sectors


Financial action task force fatf

Gatekeeper

Role of Financial Sectors

How to achieve:-

  • Sound legal & regulatory regime

  • Conform with FATF Standards

  • Partnership approach

  • Enforcement & sanction


Financial action task force fatf

Thank you !


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