Monday February 27, 2012
Monday February 27, 2012
Following on from my first blog describing the new Anti-Money Laundering Ordinance (AMLO) in Hong Kong that takes effect on 1st April 2012, the Hong Kong Monetary Authority (HKMA) which regulates banks in Hong Kong published its revised “Guideline on Anti-Money Laundering and Counter-Terrorist Financing” on 27th January.
The intention was to publish the guidelines in advance of the effective date of the AMLO in order that banks could familiarize themselves with its requirements and implement any changes they consider appropriate. The Securities & Futures Commission has issued similar guidelines to its own regulated entities.
The new HKMA publication supersedes Guideline 3.3 “Guideline on Prevention of Money Laundering” (published originally in the early 90’s and revised most recently in July 2010) and the “Supplement to the Guideline on Prevention of Money Laundering and Interpretative Notes” (published originally in 2004 after a major revision of the FATF Recommendations) and contains complete guidance in one document.
The main difference between the old and the new is that the new Guideline is published under Section 7 of the AMLO (in addition to Section 7(3) of the Banking Ordinance) which effectively gives it the force of law if breaches occur. Under AMLO, the regulators have to power to issue substantial fines or to institute criminal proceedings, a point not lost on the regulated community.
The content of the new Guideline is not substantially or materially different from its predecessors. In fact, closer examination reveals that much of the original text has been transferred to the new document but in a more user-friendly, clearer format
In that respect, I would not expect the new Guideline should add any additional burden to compliance officers since the banks should have already implemented the required measures and my own source have indicated that they do not anticipate any significant systemic or procedural changes to their AML/CFT regimes.
Of course, it now remains to be seen how the Hong Kong regulators will use their newly-acquired powers. The FSA took a fairly aggressive approach some years back and grabbed the regulated corporate attention with a series of high profile fines and the US regulators have not been slow to issue substantial fines.
Perhaps the most significant point to note is that the publication of the new Guideline and enactment of AMLO mark, if not the end, then a significant milestone in the remediation work required after the FATF Mutual Evaluation in November 2007. The Hong Kong delegation will be hoping that the report of substantial progress to the forthcoming FATF Plenary will be sufficient to remove them from further monitoring.
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