Supervisory Measures Following Seminars on Anti-Money Laundering

Our Ref.: B10/1C
B1/15C

25 April 2013
The Chief Executive
All authorized institutions
Dear Sir/Madam,
Supervisory Measures following Seminars on Anti-Money Laundering I am writing to follow up on a series of seminars on anti-money laundering and counter-financing of terrorism (AML/CFT) organised by the Hong Kong Monetary Authority (HKMA). The HKMA held a high-level AML/CFT seminar on 12 April 2013 for the Chief Executive or Alternate Chief Executive of all authorized institutions (AIs) and two technical seminars on 22 and 23 April 2013 respectively for compliance officers of AIs. The presentation materials from the two seminars are at Annex A and B respectively for your reference. The objective of the seminars was to emphasise and illustrate the importance of maintaining strong and effective AML/CFT controls. At the high-level seminar, Mr Norman Chan, Chief Executive of the HKMA, highlighted amongst other issues the paramount importance for the senior management of AIs to foster a strong risk culture embraced by all levels of staff and to forge good risk management practices in respect of AML/CFT controls. To follow up on this key message conveyed in the high-level seminar, I am writing to reiterate that the top management, including the Board of Directors in the case of locally incorporated AIs and the regional/global compliance office in the case of foreign bank branches, should explore effective ways to strengthen or reinforce the risk culture of your institution and to take proactive steps to fill all identifiable gaps in respect of AML/CFT controls.

As a first step, we expect that the issues covered in the high-level seminar should be discussed by the Board in the case of locally incorporated AIs and in the regional/global compliance meeting in the case of foreign bank branches. The discussion should focus on identifying concrete actions that can be taken to set an appropriate tone on risk culture regarding AML/CFT and to further translate the institution’s risk culture into effective AML/CFT controls. To facilitate the discussion, we will in due course provide you with further guidance on the issues that should be covered in the aforesaid deliberation as well as a template for collecting information on the steps that have been or will be taken by your institution to strengthen AML/CFT controls. If you have any questions, please contact Mr Stewart McGlynn on 2878 1095 or Ms Joyce Chan on 2878 8281. Yours faithfully, Henry Cheng Executive Director (Banking Supervision) Encl.

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Annex A - Seminar materials for 12 April 2013

High-Level Seminar on
Anti-Money Laundering
Norman T.L. Chan
Chief Executive
Hong Kong Monetary Authority
12 April 2013

• Credit Intermediation and Maturity
  Transformation
• Payment
• Wealth Management
  Key Functions of Modern Banking Capability needs constant upgrading to protect franchise

Continued growth of bank deposits, loans and assets Hong Kong as an International Financial Centre (1) Source: Hong Kong Monetary Authority 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (HKD trillion) Total loans and advances Total deposits Total assets HK$6.0 trn HK$14.9 trn

Hong Kong as an International Financial Centre (2) Growing payment activities in Hong Kong RTGS system average daily transaction value Source: Hong Kong Monetary Authority and staff calculation HKD USD HKD USD RMB HKD USD RMB 2003 13,801 4,058 -- 2012 23,054 15,744 4,600 RTGS system average daily transaction volume USD 5 bn HKD 353 bn HKD 504 bn USD 17 bn RMB 214 bn

• Loss in cost competitiveness

• Erosion of professional competence and market
  integrity

• Inadequate or inappropriate supervision

• Failure in AML work
  Potential Threats to Hong Kong’s Future IFC Status

• Compliance with international standards and
  obligations to combat money laundering

• Dire consequences for AML failures, both for
  the bank concerned and HK as a whole

• Allocation of adequate resources by banks,
  regulators and law enforcement agents

• Ownership by all stakeholders, including
  commitment of the Boards and senior management of Banks, to strong AML culture and controls A Robust AML Regime is Crucial for Hong Kong as an IFC

Review of banks’ anti-money laundering systems and controls Stewart McGlynn Anti-Money Laundering Banking Supervision Department Hong Kong Monetary Authority 12 April 2013

Disclaimer
 This presentation provides guidance to authorized institutions (“AIs”) on issues relating to the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (“AMLO”) and the AMLO Guideline. The presentation is provided for training purposes and does not form part of the formal legal and regulatory requirements of the HKMA. It should not be substituted for seeking detailed advice on any specific case from an AI’s own professional adviser.  The HKMA is the owner of the copyright and any other rights in the PowerPoint materials of this presentation. These materials may be used for personal viewing purposes or for use within an AI. Such materials may not be reproduced for or distributed to third parties, or used for commercial purposes, without the HKMA’s prior written consent.

Regulatory Regime
 Mature Anti-Money Laundering (AML) Regime

• HKMA Guideline since 1993, STR requirement since 1989/95
   Anti-Money Laundering and Counter-Terrorist Financing Ord. (AMLO) commenced on 1 April 2012  14 x AML Examinations after 1 April 2012
• 5 x In-Depth ‘Tier 2’
• 9 x Thematic examination - Transaction Monitoring (TM) &
  Suspicious Transaction Reporting (STR)

ML/TF Risk Management
 Senior Management Oversight
 Policies and Procedures
 Management of AML/CFT Function  Internal Audit and Compliance Reviews  Correspondent Banking  Transaction Screening  Transaction Monitoring  Suspicious Transaction Reporting

Senior Management Oversight
 Expectation is senior management should take clear responsibility for managing ML risks

• There should be evidence of active engagement by senior
  management in the bank’s approach to managing ML risks  AMLO requires a FI to take all reasonable measures to ensure that proper safeguards are taken to prevent a contravention and to mitigate ML and TF risks (s.23)

Senior Management Oversight
 Participation by management at sufficiently high level is needed  Senior management should receive informative and objective information sufficient to discharge AML obligations  Must be strategy or evidence of self improvement

• Coordination across the bank on AML required
• AML issues must be dealt with on a proactive basis
   Senior Management should ensure AML department has sufficient resources

Policies and Procedures
Must have in place up-to-date P&P that are appropriate to its business. These P&P must be readily accessible, effective and understood by all relevant staff. We expect banks to check whether P&P are applied consistently and effectively

Money Laundering Reporting Officer  the MLRO should have sufficient resources, experience, access and seniority to be effective  the MLRO should fully understand the rationale of policies they were overseeing  The MLRO should have sufficient awareness and oversight of the highest risk relationships Money Laundering Reporting Officers (MLRO) are responsible for oversight of the banks compliance with its AML/CFT obligations and should act as a central reference point for reporting suspicious transactions. For example:

Money Laundering Reporting Officer Our Requirements:
 MLRO should not simply be that of a passive recipient of ad hoc reports of suspicious transactions  MLRO should play an active role in the identification and reporting of suspicious transactions  This may also involve regular review of exception reports or large or irregular transaction reports as well as ad hoc reports made by staff

Internal Audit & Compliance Reviews  Banks approach to reviews of effectiveness of AML systems must be comprehensive  Scope of review must address Bank’s risks  Findings of recent IA and compliance reviews on AML controls must drive change

• Reports must be of sufficient quality
• Should ensure the information is discussed at
  sufficiently senior level
   Implementation of remedial measures must be consistent

Risks of Correspondent Banking  The correspondent AI often has no direct relationship with the underlying parties to a transaction  Banks often have limited information regarding the nature and purpose of the underlying transactions  Correspondent banking is therefore regarded as high￾risk from a ML/TF perspective  Special due diligence requirements for correspondent banking relationships apply

 Are the banks transaction monitoring systems adequate, given their business activities and size?  How does the bank ensure systematic investigations into unusual transactions and potential STRs? Transaction Monitoring

Transaction Monitoring
 Depending on nature and scale of the bank, automated TM systems may be important for effective AML controls  Must ensure sufficiently detailed system review  Should have a clear understanding of what the system could deliver / limitations

• TM can only supplement, not replace human
  element
   Responsibilities for reviewing, investigating and reporting alerts must be clearly allocated

Suspicious Transaction Reports  To what extent does the bank understand and carry out, their detection and reporting obligations on the suspected proceeds of crime?

Suspicious Transaction Reports  STR reporting is not only a legal necessity, rather it is a matter of real concern for banks  All internal reports must be subject to meaningful analysis to determine whether disclosure is required  Processes for dealing with repeat internal / external STRs must be sufficiently robust to protect the bank

Opportunity for Intervention
Customer
On Boarding
Ongoing
Monitoring
STR and Post
Reporting
Actions
Robust CDD
Ongoing
Monitoring
STR and Post
Reporting
Actions
Protect the institution from further ML risks

ML/TF Risk Management
 Senior management must demonstrate leadership on AML  Policy and procedures must reflect that leadership  AML function needs experienced people and adequate resources  AML responsibility lies with all staff but CO/MLRO play a central role  Effectiveness of controls must be regularly reviewed  ML risks should be understood and mitigated  Banks should demonstrate willingness to exit where there are unacceptable ML risks

Stewart McGlynn
Tel. 2878 1095 smcglynn@hkma.gov.hk

Supervisory Response of the HKMA Arthur Yuen Deputy Chief Executive Hong Kong Monetary Authority 12 April 2013

Well-focused Supervision
 Our programme of in-depth AML examinations will continue and at the same time be strengthened  Thematic AML examinations will remain a key part of our supervisory approach  A thematic review of the private banking sector will begin in the coming weeks  AML examinations will also test banks’ controls and vigilance to combat the risks of tax evasion

What to expect?
 We intend to be more proactive, adopting a more forward looking approach  We will review the frequency, intensity and scope of our on-site and off-site examinations  We are significantly strengthening the resources dedicated to AML supervision and are reviewing our follow-up processes  We will be prepared to take early intervention to tackle root cause rather than waiting for risks to accumulate

Key Questions
 Is the tone from the top clear in your bank?  Have you discharged your responsibility to ensure that the AML function is equipped with sufficient resources to perform effectively?  Are measures in place to ensure that your AML programme is systematic?  Is your AML programme subject to regular review?  Have you taken all reasonable measures to mitigate ML risks?

Hong Kong must have a robust AML regime  International standards and obligations on AML must be met  Effective AML measures in the banking sector are essential as it acts as a gatekeeper  Resources afforded to AML work must be adequate  The obligation to implement the AML rules fully and in good faith must always come before business interests  HKMA will be ready to take tougher actions, including the use of our powers under AMLO. Also very important for banks to raise senior management attention in AML matters

~ Thank You ~

---

Annex B - Seminar materials for 22 and 23 April 2013

Review of banks’ anti-money laundering systems and controls Stewart McGlynn Anti-Money Laundering Banking Supervision Department Hong Kong Monetary Authority 22 & 23 April 2013

Disclaimer
 This presentation provides guidance to authorized institutions (“AIs”) on issues relating to the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (“AMLO”) and the AMLO Guideline. The presentation is provided for training purposes and does not form part of the formal legal and regulatory requirements of the HKMA. It should not be substituted for seeking detailed advice on any specific case from an AI’s own professional adviser.  The HKMA is the owner of the copyright and any other rights in the PowerPoint materials of this presentation. These materials may be used for personal viewing purposes or for use within an AI. Such materials may not be reproduced for or distributed to third parties, or used for commercial purposes, without the HKMA’s prior written consent.

Regulatory Regime
 Mature Anti-Money Laundering (AML) Regime

• HKMA Guideline since 1993, STR requirement since 1989/95
   Anti-Money Laundering and Counter-Terrorist Financing Ord. (AMLO) commenced on 1 April 2012  14 x AML Examinations after 1 April 2012
• 5 x In-Depth ‘Tier 2’
• 9 x Thematic examination - Transaction Monitoring (TM) &
  Suspicious Transaction Reporting (STR)

ML/TF Risk Management
 Senior Management Oversight
 Policies and Procedures
 Management of AML/CFT Function  Internal Audit and Compliance Reviews  Correspondent Banking  Transaction Screening  Transaction Monitoring  Suspicious Transaction Reporting

Senior Management Oversight
 Expectation is senior management should take clear responsibility for managing ML risks

• There should be evidence of active engagement by senior
  management in the bank’s approach to managing ML risks  AMLO requires a FI to take all reasonable measures to ensure that proper safeguards are taken to prevent a contravention and to mitigate ML and TF risks (s.23)

Senior Management Oversight
 Participation by management at sufficiently high level is needed  Senior management should receive informative and objective information sufficient to discharge AML obligations  Must be strategy or evidence of self improvement

• Coordination across the bank on AML required
• AML issues must be dealt with on a proactive basis
   Senior Management should ensure AML department has sufficient resources

Policies and Procedures
Must have in place up-to-date P&P that are appropriate to its business. These P&P must be readily accessible, effective and understood by all relevant staff. We expect banks to check whether P&P are applied consistently and effectively

Money Laundering Reporting Officer  the MLRO should have sufficient resources, experience, access and seniority to be effective  the MLRO should fully understand the rationale of policies they were overseeing  The MLRO should have sufficient awareness and oversight of the highest risk relationships Money Laundering Reporting Officers (MLRO) are responsible for oversight of the banks compliance with its AML/CFT obligations and should act as a central reference point for reporting suspicious transactions. For example:

Money Laundering Reporting Officer Our Requirements:
 MLRO should not simply be that of a passive recipient of ad hoc reports of suspicious transactions  MLRO should play an active role in the identification and reporting of suspicious transactions  This may also involve regular review of exception reports or large or irregular transaction reports as well as ad hoc reports made by staff

Internal Audit & Compliance Reviews  Banks approach to reviews of effectiveness of AML systems must be comprehensive  Scope of review must address Bank’s risks  Findings of recent IA and compliance reviews on AML controls must drive change

• Reports must be of sufficient quality
• Should ensure the information is discussed at
  sufficiently senior level
   Implementation of remedial measures must be consistent

Risks of Correspondent Banking  The correspondent AI often has no direct relationship with the underlying parties to a transaction  Banks often have limited information regarding the nature and purpose of the underlying transactions  Correspondent banking is therefore regarded as high￾risk from a ML/TF perspective  Special due diligence requirements for correspondent banking relationships apply

Correspondent Banking
 Must consider the ML risk of Correspondent Bank  Should have adequate P&P on how to deal with respondents  Should not apply a one size fits all  Reliance on assessments that exist elsewhere within a group, without local nexus, may not be sufficient  Ensure robust monitoring of respondents identified as presenting higher risks

Transaction Screening
 Does the bank maintain a comprehensive and up-to￾date watch list database for effective identification of names that may trigger suspicion?

Transaction Screening
 Should ensure the designated parties database and high-risk / sanctioned jurisdictions list are complete  The algorithm used in the screening system should be able to identify names with minor alterations (e.g. reverse order or partial name)  Screening system must support Chinese characters / commercial code OR written guidance must be provided to mitigate this risk  Should have formal P&P for handling transactions connected with high-risk / sanctioned jurisdictions

Good Practices
 Clear P&P to ensure timely updating of the designation parties database and high-risk / sanctioned jurisdictions list  Conduct testing on the names of newly added designated parties to ensure completeness and accuracy of database  Establish internal P&P to provide guidance to staff handling transactions with sanctioned jurisdictions taking into account the restrictions imposed in sanction programmes, including the requirement for review, EDD etc

 Are the banks transaction monitoring systems adequate, given their business activities and size?  How does the bank ensure systematic investigations into unusual transactions and potential STRs? Transaction Monitoring

Transaction Monitoring
 Depending on nature and scale of the bank, automated TM systems may be important for effective AML controls  Must ensure sufficiently detailed system review

• Sufficient coverage of TM systems
• Thresholds and parameters must be appropriate
   Should have a clear understanding of what the system could deliver / limitations
• TM can only supplement, not replace human
  element
   Responsibilities for reviewing, investigating and reporting alerts must be clearly allocated

Good Practices
 Conduct detailed assessments prior to the launch of TM systems to ensure adequate coverage  Give careful consideration to thresholds and parameters and consider validation by independent third parties  No “one size fits all” - categorize thresholds and parameters according to customer’s business size and nature  Conduct regular (e.g. annual) review and enhancements on TM system by internal department or use external consultants where the system is complex or internal experience is insufficient

Suspicious Transaction Reports  To what extent does the bank understand and carry out, their detection and reporting obligations on the suspected proceeds of crime?

Suspicious Transaction Reports  STR reporting is not only a legal necessity, rather it is a matter of real concern for banks  All internal reports must be subject to meaningful analysis to determine whether disclosure is required  Guidance should be provided on connected accounts to ensure understanding  Should conduct an appropriate review of business relationship upon filing, to mitigate the risk  Processes for dealing with repeat internal / external STRs must be sufficiently robust to protect the bank  Consent System must be clearly understood

Good Practices
 Mandatory trigger event review & thorough process to determine applicability of risk classification etc  Robust P&P underpinning these actions, including escalation, to mitigate risk  Policy on repeat internal / external STRs  Termination of relationships where unacceptable ML risks existed and indicate this in the initial disclosure to the JFIU  Use of internal / external reporting experience to identify weaknesses in CDD, branch controls; evidence of active learning  Clear P&P regarding timeframe for analysis; clear guidance for escalation where immediate risk existed  Conduct regular reviews of resources allocated to these tasks, and ensure the Board act upon the findings of the review

Looking Forward

Alerts
WARNING!
Handling of alerts must be effective Actions performed must address risk

Opportunity for Intervention
Customer
On Boarding
Ongoing
Monitoring
STR and Post
Reporting
Actions
Robust CDD
Ongoing
Monitoring
STR and Post
Reporting
Actions
Protect the institution from further ML risks

Key Takeaways
 Senior management must demonstrate leadership on AML  Policy & procedure must reflect that leadership  AML function needs experienced people and adequate resources – requirement to review  AML responsibility lies with all staff but CO/MLRO play a central role  Effectiveness of controls must be regularly reviewed – Transaction Monitoring and STR are pillars  ML risks should be understood and mitigated  Banks should demonstrate willingness to exit where there are unacceptable ML risks

Stewart McGlynn
Tel. 2878 1095 smcglynn@hkma.gov.hk

Joint Financial
Intelligence Unit
Suspicious Transaction Report
Trends and Quality Improvement Chief Inspector Bernard LAW Joint Financial Intelligence Unit Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
Important Notice
All rights, including copyright, in this PowerPoint file are owned and reserved by the Hong Kong Police Force. Unless prior permission in writing is given by the Commissioner of Police, you may not use the materials other than for your personal learning and in the course of your official duty. 重要告示 香港警務處持有並保留本簡報檔案包括版權在內的所有權益。除預 先獲得警務處處長書面許可外，本簡報檔案只可用作個人學習及處 理公務上用途。 Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
Agenda

• Importance of Reporting Institutions
• Typologies
• Statistic of Suspicious Transaction
  Reports
• Quality Suspicious Transaction Reporting
• Conclusion
  Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
Reporting
Institutions
FIUs
LEAs
AML/CFT role
Importance of Reporting Institution Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
Different Players and Roles
Reporting
Institutions
FIUs LEAs

• Customer identification
• Record keeping
• Internal systems and
  controls
• Suspicious transactions
• Handling STR
• Dissemination
• Information exchange
• Feedback
• Outreach program
• ML investigation
• Asset tracing
• Asset recovery
• Information exchange
• M
  L
  A
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Joint Financial
Intelligence Unit
Reporting
Entities
STR
FIU’s
Other
Intelligence agencies
Police/
Prosecuting authorities
Intelligence products
Evidence in case
INFORMATION context
Transformation process
Transformation process
Information Flow
Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
Legislation
Reporting Obligation
Organized and Serious Crimes Ordinance “OSCO”
Section 25A(1)
A person knows or suspect that any property (directly or indirectly) represents any person’s proceeds of an indictable offence should disclose that knowledge or suspicion to an authorized officer within a reasonable time Suspicious Transaction Report (STR) Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit

• Offence if failing to report: s. 25A(1)
• Disclosure protection of ML offence: s.25A(2)
• Protection against suit: s.25A (3)
• Offence to disclose the disclosure: s.25A (5)
  tipping off “any matter likely to prejudice an investigation” Legislation Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
Typologies
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Joint Financial
Intelligence Unit
Typologies
ƒ A series of ML or TF arrangements which are conducted in similar manner or using the same methods. ƒ In general term, the study of methods, techniques and trends used by money launderer and terrorist financier. Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
To help the reporting institutions in understanding the trend and identifying the vulnerable areas used by the Money Launderer and Terrorist Financier Typologies Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
Corporate Vehicle

• easy to set up
• beneficial ownership
• shell company
  Use of TCSP
• non-resident holding several companies
• registered / corresponding address
• secretarial services
  Bank Account
• opened company accounts with different banks
• 3rd party as authorized signatories
  Typologies
  Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
Trade-based Transaction

• over & under invoicing
• counter balance
• multiple business
  Money Transfer
• e-Banking
• via Money Services Operator
• multiple transfers between accounts
  Other issues
• unlicensed Money Services Operator
• front man
• theft of identity
  Typologies
  Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
Indicators

• Multiple inward remittances from different senders
• Multiple outward remittances to overseas accounts
• Temporary repository of fund
• Destination of transfer not commensurate with customer
  profile
• Payment of “consultancy fees” or “loan”
• Accounts only operated for a few months
  Typologies
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Joint Financial
Intelligence Unit
1087111678 140291350514,55715,45714,83816062 1969020287 23282 10000 15000 20000 25000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

• Represents no. of STR made by Banks
  STR received in the past 10 years Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
Quality Reporting
Sufficient information?
Suspicion identified?
Precise and
Concise?
CDD and KYC process?
Evaluation?
Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
Sufficient Information

• Client / BO information
• company details
• ID information
• Transaction information
• fund flow
• counterparties information
  Quality Reporting
  Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit

• Background of customer/BO
• Quote source of suspicion
• Transaction patterns
• Avoid incoherent information
  Quality Reporting
  Suspicion identified
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Joint Financial
Intelligence Unit
KYC and CDD Process

• Update Personal and Company information
• Enquire customers for suspicious
  transactions
• On-going transaction monitoring
  Quality Reporting
  Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
Precise and Concise

• 23,282 STRs received in 2012
• Quality reporting is essential
• Precise and concise without redundant and
  duplicated information
  Quality Reporting
  Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
Evaluation

• Not every STR is to be reported if risk can be
  mitigated
• Detailed the conclusion reached on the
  necessity of STR reporting
• Report STR once suspicion arose
  Quality Reporting
  Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
“Compliance is not a ‘check-the-box’ exercise, but rather requires financial institutions to exercise their judgement, as informed by our guidance and assistance.” Bill Fox, ex-FinCEN Director Conclusion Hong Kong Police Force owns the copyright of this document

Joint Financial
Intelligence Unit
Thank You
Hong Kong Police Force owns the copyright of this document

Supervisory Response of the HKMA Stewart McGlynn Banking Supervision Department Hong Kong Monetary Authority 22 & 23 April 2013

Well-focused Supervision
 Our programme of in-depth AML examinations will continue and at the same time be strengthened  Thematic AML examinations will remain a key part of our supervisory approach  A thematic review of the private banking sector has just commenced  AML examinations will also test banks’ controls and vigilance to combat the risks of tax evasion

What to expect?
 We intend to be more proactive, adopting a more forward looking approach  We will review the frequency, intensity and scope of our on-site and off-site examinations  We are significantly strengthening the resources dedicated to AML supervision and are reviewing our follow-up processes  We will be prepared to take early intervention to tackle root cause rather than waiting for risks to accumulate

Key Questions
 Is the tone from the top clear in your bank?  What steps have you taken to foster a strong risk culture?  How do you ensure that the AML function is equipped with sufficient resources to perform effectively?  Do you oversee measures to ensure that your AML programme is systematic?  Is your AML programme subject to regular review?  Do you play a central and proactive role?

Key Takeaways
 International standards and obligations on AML must be met  Effective AML measures in the banking sector are essential as it acts as a gatekeeper  Resources afforded to AML work must be adequate  The obligation to implement the AML rules fully and in good faith must always come before business interests  HKMA will be ready to take tougher actions, including the use of our powers under AMLO.

~ Thank You ~