Financial Crime World

Money Lenders in Hong Kong: Complying with Anti-Money Laundering and Counter-Terrorist Financing Regulations

In the dynamic financial landscape of Hong Kong, money lenders are subject to stringent regulations aimed at preventing money laundering and terrorist financing. In this article, we explore the guidelines released by the Registrar of Money Lenders to help licensed money lenders in Hong Kong ensure they are complying with the requirements of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) and other relevant legislation.

Guideline for Compliance: An Overview

The guideline, titled “Guideline on Compliance of Anti-Money Laundering and Counter-Terrorist Financing Requirements for Licensed Money Lenders,” covers the following key topics:

  1. Definition of Money Laundering and Terrorist Financing
  2. AML/CTF Obligations
  3. Risk Assessment
  4. Compliance with Regulations

Definition of Money Laundering and Terrorist Financing

  1. Money Laundering
    • The process of making illegally-gained proceeds appear legitimate
    • Three main stages: placement, layering, and integration
  2. Terrorist Financing
    • Funding terrorist activities

AML/CTF Obligations

Money lenders are required to:

  • Take all reasonable measures to mitigate the risk of money laundering and terrorist financing
  • Develop and implement policies, procedures, and controls (PP&Cs) for:
    • Risk assessment
    • Customer due diligence measures
    • Ongoing monitoring
    • Suspicious transaction reporting
    • Record-keeping
    • Staff training
    • An independent audit function

Risk Assessment

Money lenders should assess the risks of their businesses by considering the following factors:

  • Products and services offered
  • Customer types
  • Geographical locations involved
  • High-risk jurisdictions identified by the FATF

Compliance with Regulations

Money lenders should ensure they adhere to the anti-money laundering and counter-terrorist financing requirements under various pieces of legislation:

  • Drug Trafficking (Recovery of Proceeds) Ordinance
  • Organized and Serious Crimes Ordinance
  • United Nations (Anti-Terrorism Measures) Ordinance
  • United Nations Sanctions Ordinance
  • Weapons of Mass Destruction (Control of Provision of Services) Ordinance

Conclusion

The guidelines provide a detailed framework for money lenders in Hong Kong to comply with anti-money laundering and counter-terrorist financing regulations. It is crucial for them to take these obligations seriously and establish and maintain adequate AML/CTF systems. Failure to comply could result in reputational damage and potential legal consequences.