Banks in Hong Kong must establish criteria for identifying
customers linked to terrorist financing and develop a database of
terrorist names.
“Banking institutions must be able to identify terrorist
suspects, and enhanced checks should be carried out before
transactions are processed,” Simon Topping, executive director of
banking policy for the Hong Kong Monetary Authority (HKMA), said
yesterday.
He was speaking at a press conference held concerning the
issuance of a revised supplement to the Guideline on Prevention of
Money Laundering.
Topping said banks and authorized institutions should be on the
alert for suspicious remittances and be aware of the origins of
non-profit organizations.
Apart from new guidelines related to terrorist financing, the
supplement also introduced new principles to identify high-risk
customers, including politically exposed persons, correspondent
banks and corporate vehicles such as offshore companies.
“It is necessary for local banking institutions to develop
effective policies and procedures for customer due diligence, and
they are advised to review existing accounts periodically in line
with the new standards,” Topping said. “The basic issue is whether
it is safe for banks to establish a relationship with a
customer.”
Customer due diligence should also be focused on clients
introduced by intermediaries, trust and nominee accounts, along
with non face-to-face customers, according to the supplement.
“The new supplement essentially codifies what is already
practiced by banks in Hong Kong, which are very concerned about the
issue of money laundering,” Topping said. “While the territory has
maintained a robust and effective framework to combat money
laundering activities, we must remain alert to new developments and
techniques.”
Representing the Hong Kong Association of Banks, Julian Fong
said, “The banking sector will fully support the supplement and
will work toward territory-wide implementation of its guidelines by
the end of the year, which will strengthen the regulatory framework
for local banks.”
“The supplement’s principles are in accordance with the best
international practices followed by large financial centers in the
region,” Fong added.
In collaboration with the Hong Kong Association of Banks and the
Deposit-Taking Companies Association, the HKMA has developed a set
of interpretative notes to accompany the supplement, providing
practical guidance on implementing its requirements and explaining
the use of a risk-based approach in various due diligence
processes.
“In developing the supplement and its interpretative notes, it
is our aim to ensure that there are adequate safeguards against
money laundering in the banking system, while at the same time
having regard for practicalities and the need to be
business-friendly,” said Topping. “These measures reflect Hong
Kong’s longstanding and ongoing commitment to meeting international
standards in fighting money laundering and terrorism.”
The HKMA’s existing Guideline on Prevention of Money Laundering
was issued in 1997 and previously updated in 2000.
The revised supplement takes into account 40 recommendations
issued by the Financial Action Task Force on Money Laundering last
year.
According to the authority, 11,000 suspected money-laundering
cases were reported in the territory in 2003. Case numbers have
increased steadily over the past few years.
Local banking institutions are expected to implement the
guidelines of the new supplement by the end of this year.
(China Daily June 9, 2004)