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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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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)

  • Inter-government organization

  • 34 members + 2 regional organizations

  • International AML/CFT standard setter

    (40 + 9 Recommendations)

  • Develop and promote policies


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


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)

  • To be effective : 2012-04-01

  • Guiding principles for AMLO :

    - conform with FATF standards

    - compliance cost minimized

    - partnership approach to assist market

5


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

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

CDD up-to-date & relevant

Consistent & risk profile

Identifying transactions

- complex, unusually large, unusual pattern

- no apparent economic or lawful purpose

8


Record-keeping

FIs must keep records of the following for six years :

* documents/information obtained during CDD

* transaction records

9


Proper Internal Control

FIs to take all reasonable measures

- proper safeguards to prevent contravention

- mitigate ML & TF risk

10


Independent Review Tribunal

Proper procedural safeguards and checks & balances

- S.21 disciplinary sanctions & other specified

decisions of financial regulators

11


Guidelines, etc

Financial regulators:-

- to issue AML guidelines, circulars, etc.

- to conduct AML seminars & other briefings

to assist private sectors to comply.

12


Gatekeeper

Role of Financial Sectors


Gatekeeper

Role of Financial Sectors

How to achieve:-

  • Sound legal & regulatory regime

  • Conform with FATF Standards

  • Partnership approach

  • Enforcement & sanction


Thank you !


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