Financial Crime Epidemic in Hong Kong: Closing Information Gaps

A rising tide of digital fraud is sweeping through the global financial system, with Hong Kong being no exception. Last year, the Hong Kong Monetary Authority (HKMA) received over 1,200 complaints related to banking scams, a staggering increase from 2022. The total loss to victims exceeded HK$7.2 billion.

Behind the Statistics: Understanding Financial Crime

Behind these statistics lies a complex web of deceit, where cunning criminals use technology to trick people into sending them money. Once the funds are obtained, they must be laundered through various channels to make them untraceable. This is where “money laundering” comes into play – a process that often involves moving funds quickly through networks of mule accounts.

To combat financial crime, it’s essential for law enforcement agencies and financial institutions to share information promptly. The HKMA has been working closely with the Police and the banking sector to achieve this goal through several initiatives.

Key Initiatives:

Fraud and Money Laundering Intelligence Taskforce (FMLIT): A platform for intelligence sharing among the Police, the HKMA, and banks.
Financial Intelligence Evaluation Sharing Tool (FINEST): A secure electronic platform allowing major retail banks to share information on suspicious activity.

Closing Information Gaps

Despite these efforts, there are still significant gaps in information sharing between banks. This is where the proposal comes in – to allow authorized institutions (AIs) to share information and give them legal protection for doing so.

The Proposal

The HKMA has published a consultation document outlining proposals to permit AIs to share information and provide them with legal protection. The sharing of information will be subject to strict controls, including:

Designated platforms: Information will only be shared through secure platforms like FINEST.
Confidentiality requirements: Even after information is shared, AIs will be required to keep it confidential.
Onward sharing: Permitted in some situations, subject to the same confidentiality and security requirements.

The Way Forward

The consultation period closes on March 29, 2024. The HKMA encourages all stakeholders to submit their views on the proposal.

Striking a Balance

This is a complex issue that requires striking a balance between two important objectives: protecting citizens from financial crime while protecting data privacy and confidentiality. The HKMA aims to find the right balance in implementing this proposal.