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Financial Action Task Force (FATF)

An Overview of Hong Kong’s Anti-Money Laundering & Counter-Terrorist Financing Regime (AML & CTF Regime) Michael YIP Assistant Secretary Financial Services and the Treasury (Financial Services) 30 November 2011. Financial Action Task Force (FATF). Inter-government organization

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Financial Action Task Force (FATF)

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  1. An Overview of Hong Kong’sAnti-Money Laundering & Counter-Terrorist Financing Regime(AML & CTF Regime)Michael YIPAssistant SecretaryFinancial Services and the Treasury(Financial Services)30 November 2011

  2. Financial Action Task Force (FATF) • Inter-government organization • 34 members + 2 regional organizations • International AML/CFT standard setter (40 + 9 Recommendations) • Develop and promote policies

  3. FATF Mutual Evaluation 2008 Recognized the strengths of HongKong’s AML/CFT regimes Also identified areas requiring improvements - CDD & record-keeping requirements - enforcement powers of financial regulators - criminal & supervisory sanctions - remittance agents & money changers 3

  4. 1989 Drug Trafficking (Recovery of Proceeds) Ord.- 1994 Organized & Serious Crimes Ord.- 2002 United Nations (Anti-Terrorism Measures) Ord. HK AML & CTF Regime - Overview - 2011 Anti-Money Laundering & Counter-Terrorist Financing (Financial Institutions) Ord.

  5. Anti-money Laundering & Counter-Terrorist Financing(Financial Institutions) Ord. (AMLO) • To be effective : 2012-04-01 • Guiding principles for AMLO : - conform with FATF standards - compliance cost minimized - partnership approach to assist market 5

  6. Scope AMLO apply to whom : - Licensed corporations (by SFC) - Authorized institutions (by HKMA) - Insurers, insurance agents & brokers (by OCI) - Remittance agents & money changers (by C&E) 6

  7. Customer Due Diligence FI is required to : - identify the customer & verify identity - identify beneficial owner & verify identity - understand the purpose & business nature of the business relationship When : open account, occasional transaction > $120000, wire transfer > $8000, or suspect/doubt ML 7

  8. Ongoing Monitoring CDD up-to-date & relevant Consistent & risk profile Identifying transactions - complex, unusually large, unusual pattern - no apparent economic or lawful purpose 8

  9. Record-keeping FIs must keep records of the following for six years : * documents/information obtained during CDD * transaction records 9

  10. Proper Internal Control FIs to take all reasonable measures - proper safeguards to prevent contravention - mitigate ML & TF risk 10

  11. Independent Review Tribunal Proper procedural safeguards and checks & balances - S.21 disciplinary sanctions & other specified decisions of financial regulators 11

  12. Guidelines, etc Financial regulators:- - to issue AML guidelines, circulars, etc. - to conduct AML seminars & other briefings to assist private sectors to comply. 12

  13. Gatekeeper Role of Financial Sectors

  14. Gatekeeper Role of Financial Sectors How to achieve:- • Sound legal & regulatory regime • Conform with FATF Standards • Partnership approach • Enforcement & sanction

  15. Thank you !

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