Financial Crime World

HONG KONG CUSTOMER DUE DILIGENCE REQUIREMENTS COME UNDER SCRUTINY

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Hong Kong’s Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) has introduced stringent customer due diligence requirements for Trust or Company Service Providers (TCSPs) to combat money laundering and terrorist financing.

Additional Measures for Physical Absence

When a customer is not physically present for identification purposes, TCSP licensees are required to take additional measures. These include:

  • Verifying the customer’s identity using alternative methods recognized by the Registrar of Companies
  • Using digital identification systems

Risk Mitigation Strategies

If a customer’s identity cannot be verified through physical presence, TCSPs must carry out at least one of the following risk mitigation strategies:

  • Further verifying the customer’s identity using documents or information not previously used
  • Taking supplementary measures to verify information relating to the customer
  • Ensuring that the first payment made in relation to the customer’s account is carried out through an authorized institution

Documentation and Certification

In addition, TCSPs are advised to:

  • Obtain copies of documents certified by a suitable certifier
  • Consider obtaining additional documentation to mitigate money laundering and terrorist financing risks

Compliance Guidelines

Hong Kong’s Registry for Trust and Company Service Providers has issued guidelines on compliance with anti-money laundering and counter-terrorist financing requirements. These guidelines provide further guidance on the measures outlined above.

Third-Party Intermediaries

TCSP licensees may choose to engage third-party intermediaries to carry out customer due diligence measures, subject to certain conditions. These intermediaries must be specified in the AMLO or demonstrate adequate procedures to prevent money laundering and terrorist financing.

Conclusion

In conclusion, Hong Kong’s customer due diligence requirements are designed to ensure that TCSPs meet their obligations under the AMLO and prevent the use of their services for illicit activities.