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12/01/22
From Global Regulation & Policy
Hong Kong AML Update
Hong Kong is widely regarded as having one of the most robust regulatory AML frameworks globally. In 2019, the Financial Action Task Force (FATF), the inter-governmental agency which sets international standards for AML compliance and evaluates financial regulators on their compliance with those standards, assessed Hong Kong's regime to be fully compliant with FATF and effective overall, making Hong Kong the first financial centre in Asia Pacific to receive this recognition in FATF's latest round of evaluation.
Several regulatory authorities have powers to investigate suspected breaches of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) and initiate enforcement proceedings against institutions and individuals. Most notably, the Hong Kong Monetary Authority (HKMA) regulates banks and other deposit-taking institutions, while the Securities and Futures Commission (SFC) regulates entities licensed to conduct securities and futures activities.
One notable development in November 2021 was the SFC's first-ever disciplinary action against a manager-in-charge (MIC) since the implementation of its MIC regime in 2017. The individual manager and his employer, a securities firm, were sanctioned for internal control failures leading to, among other things, AMLO and the SFC's own AML guidelines.
Hong Kong's banking sector has also seen a recent high-profile example of AML enforcement, with the HKMA taking disciplinary action, in the form of aggregate fines of HK$44.2m (US$5.7m), against four banks for breaches of AMLO. This is the first such action against banks in Hong Kong since December 2018.
In terms of current trends, Hong Kong regulators are heavily focused on regulatory technology as a means of improving compliance with AML rules. On 5 November 2021, the HKMA launched its AML RegTech Lab, an initiative aimed at developing technological solutions to improve the overall effectiveness of the AML ecosystem.
Kyle Wombolt
Kyle is Global Head, Corporate Crime & Investigations at Herbert Smith Freehills, specialising in corporate crime, AML and sanctions. Kyle is regarded as one of the Asian market's leading white collar and regulatory lawyers. He has been described as "one of the cornerstones of investigations work in Asia" and "an exceptional lawyer". Kyle has led investigations and compliance projects in more than 40 countries worldwide. He focuses on multi-jurisdictional corruption, money laundering, regulatory, fraud and accounting investigations, as well as corporate governance and sanctions issues involving multinational and major regional corporates. Kyle is admitted to practise in Hong Kong, California and New York, and is a registered foreign lawyer in England and Wales. He is the editor of Halsbury’s Laws of Hong Kong – Bribery, Corruption and Organised Crime, and a member of the Editorial Boards at Global Investigations Review and Practical Law China, among others.
