Financial Crime World

Title: Money Laundering and Counter-Terrorist Financing Obligations for Licensed Money Lenders in Hong Kong

Introduction

  • Hong Kong’s anti-money laundering (AML) and counter-terrorist financing (CTF) regime is essential for combating financial crimes and protecting the city’s financial integrity.
  • Licensed money lenders in Hong Kong must comply with the AML/CTF requirements outlined in various ordinances, such as the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615).

Understanding Money Laundering and Terrorist Financing

Money Laundering

  • Money laundering is the process of making illegally-gained proceeds appear legitimate, typically in three stages: Placement, Layering, and Integration.

Terrorist Financing

  • Terrorist financing refers to providing or collecting funds for committing terrorist acts or for the benefit of a terrorist or terrorist associate.

AML/CTF Obligations for Money Lenders

  • Money lenders must take all reasonable measures to mitigate the risk of money laundering and terrorist financing, including:
    • Establishing and implementing adequate AML/CTF systems
    • Conducting customer acceptance policies and risk assessments
    • Performing customer due diligence (CDD) measures
    • Monitoring transactions and reporting suspicious activities
    • Maintaining records and providing staff training

Risk Assessment and Adopting a Risk-Based Approach

  • Money laundering and terrorist financing risks vary among customers, products, services, and geographical locations.
  • Adopting a risk-based approach enables money lenders to allocate resources efficiently and apply appropriate control and oversight to new and existing customers.

Customer Due Diligence (CDD)

  • CDD measures allow money lenders to form a reasonable belief about their customers’ true identities and the nature of their business relationships.
  • CDD measures include identity verification, beneficial owner verification, and obtaining information on the purpose and intended nature of the business relationship.

Record-Keeping and Staff Training

  • Proper record-keeping and staff training are essential to maintaining a sound AML/CTF compliance program and ensuring regulatory compliance.

Read the full guideline for detailed discussions on these topics with examples, recommendations, and practical guidelines for licensed money lenders in Hong Kong. By understanding and adhering to these AML/CTF requirements, money lenders can effectively mitigate the risks of money laundering and terrorist financing in their businesses.