Financial Crime World

BANKS IN HONG KONG FIGHT AGAINST RISING DIGITAL FRAUD

A Growing Concern in Hong Kong

The Hong Kong Monetary Authority (HKMA) has sounded the alarm over a significant increase in digital fraud cases in the city, with over 1,200 complaints filed by banks last year. The HKMA believes that collaboration between financial institutions and law enforcement agencies is crucial in combating financial crime.

Initiatives to Combat Financial Crime

Several initiatives have been launched to enhance information sharing and intelligence gathering:

  • Fraud and Money Laundering Intelligence Taskforce (FMLIT): A 24/7 taskforce that brings together the Police, the HKMA, and the banking sector to share intelligence and combat financial crime.
  • 24/7 Stop-Payment Mechanism: A real-time system that enables banks to intercept suspicious transactions and prevent financial loss.
  • Real-Time Fraud Monitoring Systems: Advanced systems that enable banks to detect and respond to fraud in real-time.
  • Anti-Deception Alliance: A public-private partnership that aims to combat deception and protect consumers.

Notable Successes

These initiatives have achieved notable success, with:

  • Approximately HK$1.1 billion in crime proceeds restrained or confiscated
  • Around HK$12.3 billion intercepted through the 24/7 stop-payment mechanism

However, despite these efforts, mule account networks remain a significant challenge for banks to detect and close.

Closing Information Gaps between Banks

The Financial Intelligence Evaluation Sharing Tool (FINEST) was launched by the Hong Kong Association of Banks last year, enabling participating banks to share information on suspicious accounts and transactions.

Proposed Regime for Information Sharing

The HKMA has published a consultation document seeking views on proposals to permit Authorized Institutions (AIs) - licensed banks in Hong Kong - to share information and provide legal protection for such sharing. The proposed regime would:

  • Allow AIs to share information where there are indications of criminal activity
  • Subject to strict controls and safeguards, including designated platforms like FINEST
  • Ensure security and confidentiality

Supervision and Guidance

The HKMA will supervise the AIs for compliance with the proposed rules and issue comprehensive guidance on handling information.

Public Consultation

The consultation document can be found here, and the public is invited to submit their views before 29 March 2024.