Hong_Kong Hong Kong

New Documents

The Hong Kong Monetary Authority published a thematic review of authorized institutions’ transaction monitoring systems which highlights the use of artificial intelligence to optimize performance.

The Hong Kong Monetary Authority and the Hong Kong Association of Banks launched the Anti-Scam Consumer Protection Charter 2.0 to combat credit card scams and digital frauds.

Enforcement Actions

The Hong Kong Securities and Futures Commission suspended Andy Wong Yeung, the former director and responsible officer in charge of overall management oversight of City International Futures (Hong Kong) Limited, until Nov. 8, 2024.

The Hong Kong Monetary Authority disciplined the North Point, Hong Kong-based chapter of the foreign exchange company under the Payment Systems and Stored Value Facilities Ordinance.


Important Facts

  • The U.S. State Department labels Hong Kong as a major money laundering jurisdiction. Hong Kong, a Special Administrative Region of the People’s Republic of China, is a major international financial and trading center. Hong Kong is the world’s sixth largest banking center in terms of external transactions and the fourth largest foreign exchange trading center. Hong Kong does not differentiate between offshore and onshore entities for licensing and supervisory purposes, and it has its own U.S. dollar interbank clearing system for settling transactions. The country’s low tax rates and simplified tax regime, together with its sophisticated banking system, shell company formation agents, free port status and the absence of currency and exchange controls present vulnerabilities for money laundering, including trade-based money laundering and underground finance. Hong Kong-based shell companies have been exploited by a variety of suspicious actors to launder money, facilitate illicit trade and gain access to the international financial system. The primary sources of laundered funds – derived from local and overseas criminal activity – are fraud and financial crimes, illegal gambling, loan sharking, and smuggling. Hong Kong requires financial institutions and designated non-financial businesses and professions to comply with customer due diligence procedures and record-keeping requirements. In September 2020, the Hong Kong Monetary Authority updated guidance to require that banks treat suspected breaches of the newly implemented national security law in the same way as AML/CTF violations, and submit related suspicious transaction reports (STRs). The jurisdiction also requires all companies incorporated in Hong Kong to maintain beneficial ownership information. In 2019, the financial intelligence unit received a total of 51,588 STRs and there were 103 money laundering convictions.
-Source: 2021 International Narcotics Control Strategy Report (INCSR)

Rankings

FATF i | 2013 Methodology

Technical Effectiveness
Compliant : 11 High : 0
Largely Compliant : 25 Substantial : 6
Partially Compliant : 4 Moderate : 5
Non-Compliant : 0 Low : 0

Hong Kong's technical compliance was re-rated in a Feb 16, 2023 follow-up report.

BASEL i

Rank : 54/110
Score : 5.2/10

TRANSPARENCY INTERNATIONAL i

Rank : 11/179
Score : 77/100

Tax Justice Network i

Rank : 4/133
Score : 66/100