| 26th |
- Our Association deeply regrets that recently bank accounts of many licensed money service operators ("MSOs") were terminated by local well-established banks. While we understand that businesses of licensed MSOs are affected by termination of accounts by banks due to business relationships or anti-money laundering policies, it is a global trend that anti-money laundering laws and regulations are becoming increasingly vigorous. In order to build a strong business relationship with banks, licensed MSOs should perform compliance procedures accordingly, starting from reflecting actual business nature when opening account, cooperation in regular and irregular sample testing conducted by banks, and to notify the bank as soon as the once business nature has changed. At the same time, licensed MSOs should become more in line with the development direction of banks in order to achieve win-win situation.
- In order to achieve the above-mentioned targets, licensed MSOs should invest in resources for compliance work e.g. use of electronic transaction system with anti-money laundering monitoring function, use of background search tools in order to identify commercial criminals, sanctioned persons and politically exposed persons etc. , lay down suitable operational compliance policies and procedures etc. , consider hiring independent compliance officer and/or money laundering reporting officer, proactively provide training to staff, conduct periodic evaluation on the overall compliance process and effectiveness (can consider engaging independent professions to perform the evaluation) etc.
- Banks and licensed MSOs both need to adapt to the constantly changing compliance requirement. As part of the financial services sector, we should take a step further in enhancing the compliance level in order to meet the requirements of our business partners.
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| 19th |
- Attended the Anti-Money Laundering Seminar (English session) for Money Service Operators organized by the Financial Services and the Treasury Bureau, the Hong Kong Police Force and the HKC&ED. Besides issues presented by the speakers on 3 September 2014 Anti-Money Laundering Seminar (Cantonese session), the following points were also addressed:
- Over the year, a total of 39 unsuccessful cases of telephone deception were discovered and reported by person-in-charge of staff of money service operators. The crimes were intercepted and the victims were saved from monetary loss.
- Risk Assessment:
- Licensed MSOs should conduct risk assessment once they start to establish business relationship with customers. After the assessment, different policies, procedures and control measure in order to monitor customers and conduct ongoing assessment.
- Risk assessment can be based on customers, products, services, delivery channels and geographical locations. Assessment will change over time, depending on how circumstances develop, and how threats evolve. Hence, licensed MSOs may therefore have to adjust its risk assessment of a particular customer from time to time and review the extent of the CDD and ongoing monitoring to be applied to the customer.
- Licensed MSOs should keep its policies and procedures under regular review and assess that its risk mitigation procedures and controls are working effectively.
- Licensed MSOs should keep records and relevant documents of the risk assessment as well as to perform regular updates based on different risk levels, so that it can demonstrate to the HKC&ED and regulatory authorities:
- how it assesses the customer's ML/TF risk; and
- the extent of CDD and ongoing monitoring is appropriate based on that customer's ML/TF risk.
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| 17th |
- Attended "Current-Day Challenges For Modern-Day Risk Professionals" organised by Dow Jones. The Forum discussed about: (1) False Positive Reduction; (2) 2014 AML Survey Highlights; (3) Biggest Regulatory Challenges for 2015/2016; and (4) Transaction Screening and Sanctions. Our Association would like to highlight the following:
- Cost of compliance continues to be underestimated
- KYC continues to be the focus of regulators
- Technology effectiveness can be improved
- Lack of qualified resources
- Family name concentration (USA 20%, Latin America 55% and China 87%)
- Our Association appeals to all licensed MSOs to allocate more resources in compliance in order to combat the money laundering and enhance the sanctions compliance.
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| 3rd |
- Date: 27 November 2014 (Thursday)
- Time: 19:30 - 21:30
- Venue: VTC Tower, 27 Wood Road, Wanchai, Hong Kong
- Programme Objectives:
- Aims to provide money service operators better understanding of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance and the Guideline on Anti-Money Laundering and Counter-Terrorist Financing (For Money Service Operators)
- Raise participants' awareness of the importance of Customer Due Diligence, enhance understanding of customers so that they can help to detect irregular or suspicious financial activities, which results to increased compliance standard of money service operators
- The course only costs HK$100 for all licensed money service practitioners. Please complete the registration form as soon as possible and submit it to our office.
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| 3rd |
- Attended the Anti-Money Laundering Seminar for Money Service Operators organized by the Financial Services and the Treasury Bureau, the Hong Kong Police Force and the HKC&ED. The seminar discussed about: (1) Emerging Money Laundering Methods and Trends; (2) Vulnerability of MSOs shown in Telephone Deception Cases; (3) Licensing Requirements and Key Compliance Issues under the AMLO; and (4) Significance of Suspicious Transaction Reports: Quality and Quantity. The following points were covered:
- Telephone Deception - Example including fraudster posing as relatives and friends of victim, calling the victim claiming that they have financial difficulties and requiring the victim to remit money to Mainland China through money changers. In order to combat telephone deception cases more effectively, the Police conducted the "Appleshiner" operation in June and July 2014, which is a crime prevention campaign at MSOs and black spots for payments for "virtual kidnap" throughout Hong Kong. Our Association appeals to all licensed MSOs to fully cooperate in combating such scams. When dealing with remittance, please understand the reasons for the remittance in order to identify victims and relevant suspicious transactions at an early stage to reduce the occurrence of such scams.
- In relation to submission of Suspicious Transaction Reports ("STRs"), as of July 2014, licensed MSOs submitted a total 1,367 cases of suspicious transactions. The number of STRs submitted is showing an increasing trend from 2011 to mid-2014, reflecting an increased awareness of the industry in combatting money laundering. Our Association appeals to licensed MSOs to pay attention to red flags such as: (1) Unusually large cash transactions; (2) Significant increase in personal or business transactions without apparent reasons; (3) Multiple small amount transaction exchange or remittance of cash etc. When submitting report, describe and explain the relevant red flag in order to enhance the quality of the STR in order to assist the JFIU in their work and process and to improve their financial intelligence analysis and publication efficiency.
- Risk-based approach to conduct due diligence and on-going monitoring (including customer risk, product/service risk, payment/distribution channel risk and country risk etc)
- This is recognized as an effective way to combat money laundering/terrorist-financing. The general principle of risk-based approach is that customers are assessed and categorized into different risk money-laundering/terrorist-financing risk level. Of higher money laundering/terrorist-financing risks, MSOs should take enhanced measures to manage and mitigate those risks, and that correspondingly where the risks are lower, simplified measures may be applied. Resources can be allocated more effectively by prioritizing customers by their risk levels so that more attention can be allocated to customers that pose highest risks.
- The HKC&ED reminds licensees that a MSO licence must be made within 90 days but not later than 45 days before the licence is due to expire. Otherwise, the licensee needs to apply for a fresh new MSO licence. Please read the relevant license application form guidance notes, online demo and relevant forms.
- A licensee needs to notify the CCE of the following changes in MSO registration particulars by completing Form 6 (Notification of Changes in Particulars), Appendix 6 and relevant supporting documents within 1 month of such changes: (1) Detailed changes of Partners / Directors / Ultimate Owners; (2) Particulars of Premises used for the operation of a Money Service; (3) Name of Business / Corporation; and (4) Deletion / addition of the Bank Account used for operating your Money Service.
- In the new round of mutual evaluation conducted by the Financial Action Task Force ("FATF"), the FATF will focus on the effectiveness of the implementation of anti-money laundering policies by financial institutions site visits will be conducted. In view of this, the HKC&ED is coordinating with the process and will collect from MSOs their anti-money laundering and counter terrorist-financing risk assessment and effectiveness through questionnaire. Our Association appeals to all licensed MSOs to proactively prepare and respond to the questionnaire.
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| 1st |
- The Joint Financial Intelligence Unit ("JFIU") recently issued its 2013 Annual Report. Below are some of the key points addressed:
- The annual figure of Suspicious Transaction Report ("STR") has been rising year by year, and it reached a record high of 32,907 in 2013, an increase on 41.3% from that in 2012.
- The JFIU welcomes continuous reporting through STR and at the same time places emphasis on the quality of STRs. The JFIU looks forward for more substantial details in each STR, which will lead to higher likelihood of intelligence cultivation and hence yield higher value to the investigation conducted by authorities or intelligence exchange with FIU counterparts.
- Filing a STR to the JFIU is not equivalent to making a formal report of crime to the Hong Kong Police Force or other enforcement agencies. If any person believes a crime has occurred, he/she should not hesitate to make a formal report ti Police instead of filing an STR.
- Amongst the sectors of financial institutions and designated non-financial businesses and professions, the number of STRs contributed by Money Service Operators is second to those submitted by banks.
- Section 25A of the Drug Trafficking (Recovery of Proceeds) Ordinance and the Organized and Serious Crime Ordinance make it an offence to fail to disclose where a person knows or suspects that property represents the proceeds of drug trafficking or of an indictable offence respectively.
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