Guideline on Anti-Money Laundering and Counter-Terrorist Financing – Address Verification Requirements

Our Ref.: B10/1C B1/15C 11 October 2017 The Chief Executive All Authorized Institutions Dear Sir/Madam, Guideline on Anti-Money Laundering and Counter-Terrorist Financing – Address Verification Requirements The Hong Kong Monetary Authority (HKMA) and the other relevant authorities (RAs) 1 have been reviewing various aspects of the anti-money laundering and counter-financing of terrorism (AML/CFT) regulatory requirements for financial institutions (FIs)2 , which include the address verification requirements stipulated in the Guideline on Anti-Money Laundering and Counter-Terrorist Financing (AML Guideline). Taking into account feedback from various stakeholders about AML/CFT processes and industry developments, the HKMA and the other RAs have agreed to remove the address verification requirements currently set out in the AML Guideline. As a result, FIs are only required to collect address information of customers and/or beneficial owners without the need to collect documentary evidence for AML/CFT purpose. Relevant paragraphs of the AML Guideline that will be amended to reflect the removal of the address verification requirements are listed in the Annex. Such amendments to the AML Guideline are expected to be gazetted tentatively in the first half of 2018 in conjunction with other revisions3 to the AML Guideline resulting from the passage of Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) (Amendment) Bill 2017 (the Bill) 4 . 1 The other relevant authorities are: the Securities and Futures Commission (SFC), the Insurance Authority and the Customs and Excise Department. 2 These financial institutions are: authorized institutions; licensed corporations; authorized insurers, appointed insurance agents and authorized insurance brokers carrying on or advising on long term business; and licensed money service operators. 3 The Bill includes the proposal to amend the requirements in relation to wire transfers, so consequential amendments will also be made to Chapter 10 of the AML Guideline, including relevant address verification requirements. 4 The Bill is being scrutinized by the Legislative Council.

• 2 - In the meantime, any absence of verification of address (as otherwise envisaged by paragraphs in the Annex) will be regarded by the HKMA and the other RAs as justified under paragraph 1.7 of the AML Guideline. Authorized Institutions (AIs) may start reviewing and adopt the changes as soon as it is practicable to do so. It should be noted that some AIs may, under certain circumstances, still require address verification from a customer for other purposes (e.g. group requirements, other local or overseas legal and regulatory requirements5 ). In such circumstances, AIs should communicate clearly the reasons of requiring verification of address to the customer. If you have any questions relating to this letter, please contact Ms Sophia Lam at 2878 1356 or Mr Gavin Cheung at 2878 8305. Yours faithfully, Meena Datwani Executive Director (Enforcement and AML) Encl. 5 For example, Registered Institutions should pay attention to paragraph 5.4 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct, a.k.a. the Client Identity Rule).