Financial Crime World

Hong Kong Financial Firms Must Stay Vigilant Against Money Laundering and Terrorist Financing

In an effort to combat money laundering and terrorist financing, financial firms in Hong Kong must ensure they are taking robust measures to prevent these illegal activities. According to recent guidelines from the Hong Kong Institute of Certified Public Accountants (HKICPA), firms must regularly review their policies and procedures to stay ahead of evolving threats.

Continuous Risk Assessment

Firms must conduct ongoing risk assessments to identify potential vulnerabilities in their business operations. This includes:

  • Identifying high-risk clients
  • Monitoring transactions for suspicious activity
  • Staying informed about the latest regulatory requirements and guidance

Senior Management Oversight

Senior management is responsible for ensuring that AML/CFT policies and procedures are effective and compliant with regulatory requirements. Firms must appoint a compliance officer (CO) and a money laundering reporting officer (MLRO), who will play critical roles in implementing and monitoring AML/CFT measures.

Compliance Officer Role

The CO is responsible for overseeing the firm’s AML/CFT systems, ensuring they are up-to-date and compliant with regulatory requirements. This includes:

  • Reviewing internal controls
  • Identifying and addressing deficiencies
  • Providing guidance to staff on AML/CFT procedures

Money Laundering Reporting Officer Role

The MLRO plays a critical role in identifying and reporting suspicious transactions to the Joint Financial Intelligence Unit (JFIU). The MLRO must:

  • Review internal disclosures
  • Maintain records of reviews
  • Provide guidance on avoiding “tipping off” where disclosures are made

Independent Compliance Function

Firms should establish an independent compliance function that reports directly to senior management. This ensures that AML/CFT measures are implemented effectively and independently of business operations.

Staff Screening

Firms must establish procedures to ensure the integrity of new employees, including:

  • Conducting background checks
  • Verifying their qualifications

Overseas Operations

Firms with overseas branches or subsidiaries must adopt a group-wide AML/CFT policy to ensure compliance with CDD and RK requirements in all jurisdictions where they operate.

Conclusion

Hong Kong financial firms must remain vigilant against money laundering and terrorist financing by implementing robust AML/CFT measures, conducting ongoing risk assessments, and ensuring effective senior management oversight. By doing so, they can help protect the integrity of the financial system and prevent illegal activities from undermining economic stability.