The new Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance will come into operation on 1 April, 2012. What does it mean to you institution?
  • An analysis of the Ordinance
  • Best practices of implementation of the new legislation to FI
  • The kinds of sanctions can be imposed on a FI for a breach of the statutory requirements
  • Politically exposed person and KYC




Gavin Shiu, Senior Assistant Director of Public Prosecutions, Department of Justice

Patricia Sullivan, Regional Head of Anti-Money Laundering, Sanctions and Anti-Bribery Compliance, Asia Pacific, UBS

David Cope, Executive Director, Legal and Compliance, Morgan Stanley

Stephen Chan, HK Money Laundering Reporting Officer, Credit Suisse


The Anti-money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance 2011 (AML(FI)O)

By Gavin Shiu, Senior Assistant Director of Public Prosecutions, Department of Justice
New offences and a new regulator for the money service operators are introduced in the Anti-money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (Cap 615).  This law became effective on 1 April 2012.
During the last Hong Kong FATF/APG evaluation conducted in 2007-8 the Hong Kong Monetary Authority (HKMA) guidelines had no force in law and failed to impose obligations to obtain information in relation to bank accounts. This was a weakness identified by the Third Mutual Evaluation Report on Anti-money Laundering and Combating the Financing of Terrorism, Hong Kong, China, 11 July 2008.
Additionally, money remitters and money exchangers did not have a regulator and it was unclear to what extent they implemented any Customer Due Diligence (CDD). The money remitters and money exchangers had no obligations to do any real CDD and were only required to keep limited records of payments.
The new ordinance
The AMLO addresses these concerns, principally, by making CDD listed in Sch 2 of the AMLO applicable to all financial institutions, including money remitters and money exchangers to be known collectively as ‘money service operators’ enforceable by law. There are offences introduced to punish and deter should the CDD requirements not be met. The enforcers are to be the respective regulators of the various types of financial institutions such as the HKMA and Securities and Futures Commission (SFC). Tribunals will deal with any objections to discipline imposed by the regulators. The new regulator for the money service operators will be the Customs and Excise Department and this coupled with the CDD imposed upon this sector for the first time is a significant change.
Innoxcell Asia GRC Exchange
With a global economy where funds can be rapidly sent offshore many financial institutions book their transactions outside of Hong Kong, despite the business having been solicited here. David Cope, executive director of legal and compliance at Morgan Stanley in Hong Kong stated that the majority of investment bookings are not in Hong Kong. The HKMA allows some discretion in accordance with industry norms and common sense as to where the customer business is located.  If satisfactory CDD is performed in the other jurisdiction where the business is booked this may have a bearing on what requirements need be fulfilled here.  However the SFC’s guidelines indicate if the service provided was a regulated activity in Hong Kong then the business was a customer of the Hong Kong branch. Morgan Stanley would treat the customer as a Hong Kong one when it would feel uncomfortable explaining to regulators why it did not. 
Patricia Sullivan, regional managing director for legal and compliance at UBS in Hong Kong said the nexus to Hong Kong is an important factor.  What was the extent of the effect on the Hong Kong public of the business activity had to be considered and if it was not fleeting then compliance with the AMLO would be necessary even for business booked overseas. Gavin Shiu Senior Assistant Director of Public Prosecutions stated that nexus with Hong Kong was important but if in any doubt the AMLO should be observed and the regulator consulted. 
For further information, please contact:
Gavin T Shiu, Senior Assistant Director of Public Prosecutions, Department of Justice

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