Financial Crime World

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Key Issues and Priorities for Financial Institutions in Hong Kong

The Hong Kong Monetary Authority (HKMA) has identified several key areas that require attention from financial institutions (FIs) in Hong Kong. These issues are critical to ensuring that FIs remain compliant, resilient, and competitive in a rapidly changing regulatory environment.

Top 4 Key Issues for Financial Institutions

LIBOR Transition

The HKMA emphasizes the need for FIs to transition away from London Interbank Offered Rate (LIBOR) by the end of 2021. However, the industry is struggling to keep pace with this deadline.

  • Key Takeaways:
    • Understand your firm’s exposure to products referencing LIBOR
    • Do not wait until 2023 to start the transition process
    • Include adequate fallback provisions in all newly issued LIBOR-linked contracts
    • Be able to offer products with an alternative reference rate

Compliance Program Transformation

The acceleration of digital transformation due to COVID-19 has created new challenges and risks that require FIs to adapt their compliance functions faster than ever.

  • Key Takeaways:
    • Understand the skills and capabilities of the current team
    • Identify areas that need enhancement to embrace the digital future
    • Identify technologies that can support your transformation goals

Other Key Areas for Attention


In addition to LIBOR transition and compliance program transformation, the HKMA also highlights the importance of:

  • Third-party risk management: FIs must be able to effectively manage third-party risks to ensure their business operations are resilient.
  • Cybersecurity: FIs must have robust cybersecurity measures in place to protect themselves against cyber threats.
  • Conduct risk: FIs must prioritize conduct risk management to prevent misconduct and maintain trust with customers.

By prioritizing these key areas, financial institutions can ensure they remain compliant, resilient, and competitive in a rapidly changing regulatory environment.