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Hong Kong’s AML Compliance Requirements: An Overview

By Carl Fernandes, Denise Fung, Kishore Bhindi, Shirley Au Yeung, and Clara Hackney of Linklaters LLP

As part of our ongoing commitment to providing expert guidance on anti-money laundering (AML) compliance, we are pleased to present this comprehensive overview of the AML requirements in Hong Kong.

Specific AML Compliance Requirements for Covered Institutions

In Hong Kong, covered institutions must establish and maintain effective systems and controls to manage and mitigate money laundering and terrorist financing risks. This includes ensuring compliance with customer due diligence (CDD) requirements, record-keeping obligations, and business monitoring.

  • Carry out CDD, which involves identifying and verifying a client’s identity, as well as that of any beneficial owners.
  • Obtain information on the purpose and intended nature of a business relationship with a client.
  • Continuously monitor their business relationships with customers, including periodically reviewing information and documents obtained for CDD purposes, monitoring transactions to ensure consistency with the institution’s knowledge of the customer, and identifying unusual or complex transactions.

Record-Keeping and Reporting Requirements

Covered institutions are also required to keep records of transactions, CDD, and other relevant information necessary to ensure a clear audit trail. The record-keeping procedures must be commensurate with the nature, size, and complexity of the business.

  • In the event of suspicious activity, covered institutions are obligated to make suspicious transaction reports (STRs) to the Joint Financial Intelligence Unit.
  • Factors that trigger the requirement to report suspicious activity include knowledge or suspicion of money laundering or terrorist financing activity.

Government Authorities Responsible for Examination and Enforcement

The examination and enforcement of AML compliance in Hong Kong is a shared responsibility among multiple government authorities, including:

  • The Hong Kong Monetary Authority
  • The Securities and Futures Commission
  • The Insurance Authority
  • The Money Service Supervision Bureau
  • DNFBPs are supervised by various professional bodies and registries.

Conclusion

In conclusion, Hong Kong’s AML compliance requirements are designed to prevent and detect money laundering and terrorist financing activities. Covered institutions must establish effective systems and controls to manage and mitigate risks, conduct ongoing monitoring of business relationships, maintain accurate records, and report suspicious activity promptly.

By understanding these requirements, financial institutions can ensure compliance with the Anti-Money Laundering Ordinance (AMLO) and avoid potential penalties for non-compliance. At Linklaters LLP, we are committed to providing expert guidance on AML compliance to help our clients navigate this complex regulatory landscape.

About the Authors

  • Carl Fernandes is a partner at Linklaters LLP.
  • Denise Fung is an associate at Linklaters LLP.
  • Kishore Bhindi is a counsel at Linklaters LLP.
  • Shirley Au Yeung is an associate at Linklaters LLP.
  • Clara Hackney is an associate at Linklaters LLP.

Contact Us

For further information or to learn more about our AML compliance services, please contact us at [insert contact information].