The Hong Kong Monetary Authority (HKMA) is Hong Kong’s central banking institution. It was established on 1 April 1993 by merging the Office of the Exchange Fund and the Office of the Commissioner of Banking. The HKMA’s four main functions are:
Hong Kong is a member of international standard setting bodies, including the Financial Action Task Force (FATF) and the Asia/Pacific Group on Money Laundering (APG), since 1991 and 1997 respectively. Hong Kong’s anti money laundering and counter financing of terrorism regime earns positive assessment from the Financial Action Task Force (FATF), making it the first FATF member jurisdiction in the Asia Pacific region to achieve an overall compliant result.
Money laundering and terrorist financing (ML/TF) represent significant threats to the integrity of economic and financial systems. The Hong Kong Monetary Authority (HKMA), overall AML/CFT regime has developed relevant policies and guidance for the banking sector, which focus on safeguarding the banking system from ML/TF risks.
The main legislation relevant for Authorised Institution’s (AI) AML/CFT Systems is the Anti Money Laundering and Counter Terrorist Financing Ordinance (AMLO), which sets out the customer due diligence and record keeping requirements, and the Banking Ordinance (BO), required for AIs to maintain adequate systems of control.
The risk-based approach (RBA) is central to the effective implementation of an AML/CFT regime. A RBA to AML/CFT means that jurisdictions, competent authorities, and Ais, are expected to identify, assess and understand the ML/TF risks to which they are exposed and take AML/CFT measures commensurate with those risks in order to manage and mitigate them effectively. An Authorised Institution should have AML/CFT systems, which are approved by senior management, to enable the institutions to effectively manage and mitigate the risks; monitor the implementation AML/CFT systems; and take enhanced measures to manage and mitigate the risk, where higher risks are identified.
An Authorised Institution should implement AML/CFT systems in regard to nature, size and complexity of its business and ML/TF risks arising from those business and should include: