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Hong Kong Monetary Authority Upgrades Guidance on Transaction Monitoring and Reporting
In an effort to strengthen its anti-money laundering (AML) and counter-financing of terrorism (CFT) efforts, the Hong Kong Monetary Authority (HKMA) has released an updated Guidance Paper on Transaction Monitoring, Screening, and Suspicious Transaction Reporting.
Key Objectives of the Updated Guidance
The revised guidance aims to support stored value facility licensees in improving their effectiveness and efficiency in monitoring transactions, screening suspicious activity, and reporting potential financial crimes. The updates are designed to align with international standards and best practices, as outlined in the Hong Kong Money Laundering and Terrorist Financing Risk Assessment Report 2022.
- Enhance the use of technology to generate targeted alerts that deliver actionable intelligence
- Increase emphasis on data accuracy and integration of external information, such as commercial data from the Commercial Data Interchange (CDI)
- Improve customer due diligence and data-driven customer risk assessment and monitoring
Increased Efficiency in Suspicious Transaction Reporting
In 2022, intelligence-led suspicious transaction reports (STRs) contributed by authorized institutions through the Fraud and Money Laundering Intelligence Taskforce (FMLIT) increased by 319%, resulting in a 113% increase in criminal proceeds being restrained or confiscated. The updated guidance incorporates industry developments and capabilities, including expectations for reporting networks of suspicious accounts and data points related to cyber-enabled frauds.
- Enhanced STR reporting capabilities
- Increased focus on detecting and preventing cyber-enabled frauds
Implementation Required
Stored value facility licensees are advised to review the updates and implement necessary policy, operational, and technical changes to align their practices with those set out in the Guidance Paper as soon as practicable. Major updates are summarized in the Annex for ease of reference.
- Review the updated guidance and make necessary policy and operational changes
- Implement technical enhancements to improve transaction monitoring and reporting capabilities
HKMA’s Commitment to AML/CFT Efforts
The HKMA will continue its work to encourage and support innovation in AML/CFT systems and processes, ensuring that stored value facility licensees effectively manage heightened threats from fraud and financial crime.
For any questions or concerns regarding this circular, please contact aml@hkma.iclnet.hk.