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Hong Kong at Risk of Terrorist Financing Amid Rising Money Laundering Threats

HONG KONG - A new report by the Hong Kong government has sounded a warning about the escalating risks of money laundering (ML) and terrorist financing (TF) in the city’s financial sector.

Money Laundering and Terrorist Financing Risks in Hong Kong

The “Hong Kong Money Laundering and Terrorist Financing Risk Assessment Report 2022” highlights that the banking sector continues to face a high level of ML risks, comparable to those seen globally. Fraud, corruption, and tax crimes remain the most prominent threats to banks, with major developments such as online commerce and financial services, virtual banks, and new payment methods contributing to an increased risk landscape.

Progress Made by HKMA

The report notes that the Hong Kong Monetary Authority (HKMA) has made significant progress in addressing ML/TF risks since the first assessment in 2018. However, it warns that the local banking sector must remain vigilant in light of emerging threats and technological advancements.

“The HKMA will continue to work closely with authorized institutions and other competent authorities to address ML/TF risks in the banking sector,” said Executive Director (Enforcement and AML) Carmen Chu. “We will roll out further initiatives to support innovation and Regtech adoption, including the second Anti-Money Laundering Regtech Lab, and strengthen collaboration and intelligence sharing with the banking industry and law enforcement.”

Key Risks and Developments

• Fraud, Corruption, and Tax Crimes: Remain the most prominent threats to banks
• Online Commerce and Financial Services: Have accelerated, increasing ML risks
• Virtual Banks and New Payment Methods: Have emerged, widening the risk landscape
• Faster Payment System: In Hong Kong has expanded, creating new opportunities for ML

Next Steps

• HKMA Collaboration: Will continue to work closely with authorized institutions and other competent authorities to address ML/TF risks
• Innovation and Regtech Adoption: Further initiatives will be rolled out to support innovation and Regtech adoption
• Collaboration and Intelligence Sharing: With the banking industry and law enforcement will be strengthened