HKMA to tighten screws on money laundering at Hong Kong banks

2015-01-18

Suspicious transaction reports received by police rose 15.4 per cent last year to 38,000

■HKMA expected to take more more disciplinary and prosecution action against money laundering in Hong Kong.

Hong Kong authorities are expected to crack down harder on money laundering this year, as it continues to be a serious problem among smaller banks in the city and on the mainland.

"For 2015, the Hong Kong Monetary Authority will take more disciplinary and prosecution action against AMLO (Anti-Money Laundering and Counter-Terrorist Financing Ordinance) violations coupled with fines," said Yu Manhim, a partner in fraud investigations and dispute services at Ernst & Young.

"We saw in the past year the Hong Kong regulator had on many occasions expressed strong messages of stricter controls and possible fines in cases of violation, so we believe the regulators will take stronger action."

AMLO, Hong Kong's law against money laundering, took effect in April 2012.

"HKMA takes anti-money laundering and counter-terrorist financing controls very seriously and will use the full range of powers conferred by the Banking Ordinance and AMLO where these may be warranted," said an HKMA spokeswoman.

The HKMA has been strengthening its resources for supervision, resulting in the formation of an anti-money laundering division last year.

The number of suspicious transaction reports received by the Joint Financial Intelligence Unit of the Hong Kong police is forecast to rise 15.4 per cent to 38,000 in 2014, according to figures released by the unit. For the first eight months of last year, the unit received 25,361 such reports.

Some banks in Hong Kong have turned down clients for fear of violating AMLO, said Simon Deane, a partner at Hong Kong law firm Deacons.

He cited the case of a major international bank where a customer in its US branch tried to open an account in Hong Kong with the bank. It turned him down because it decided he was too risky as far as Hong Kong's anti-money laundering requirements go, said Deane.

While the bigger banks in Hong Kong and the mainland are co-operating with the authorities, this is less so with the smaller banks, said Julian Russell, a director of Hong Kong risk consultancy Pacific Risk. "If you want to launder money, choose a smaller bank."

Source: South China Morning Post