The Hong Kong Monetary Authority took disciplinary action against three banks for violating the Anti-Money Laundering and Terrorist Financing Ordinance

The Zhitong Finance App learned that the Hong Kong Monetary Authority announced on July 22 that it has completed investigation and disciplinary procedures against the three banks in accordance with the Anti-Money Laundering and Terrorist Financing Ordinance (Chapter 615 of the Laws of Hong Kong) (“Anti-Money Laundering Ordinance”). The three banks are Indian Overseas Bank, Hong Kong Branch (IOBHK), Bank of Communications (Hong Kong) Limited (BOC (Hong Kong)), and Bank of Communications Limited Hong Kong Branch (BOC Hong Kong Branch).

The Hong Kong Monetary Authority condemned IOBHK and ordered it to review past transactions and develop and implement remedies to rectify its violations; at the same time, IOBHK was fined HK$8.5 million. In addition, the Hong Kong Monetary Authority imposed a fine of HK$4 million on BOC (Hong Kong) and a fine of HK$3.7 million on BOC Hong Kong Branch.

The Hong Kong Monetary Authority mentioned that the disciplinary action was carried out after the Hong Kong Monetary Authority investigated the bank's compliance with the system and control measures established by the Anti-Money Laundering Ordinance.

The investigation found that the three banks had failed to establish and maintain effective measures to continuously monitor business relationships with customers. Among them, IOBHK's transaction monitoring mechanism and management's supervision of anti-money laundering and terrorist fund-raising control measures are grossly lacking. The violation by BOC (Hong Kong) and BOC Hong Kong Branch stemmed from the failure of the two banks to include certain types of transactions into the transaction monitoring system shared by the two banks, which reduced the effectiveness of the system in identifying suspicious activity.

In deciding on the above disciplinary action, the Hong Kong Monetary Authority has taken into account relevant circumstances and factors, including: the seriousness of the investigation findings; the need to send clear deterrent messages to the above three banks and the industry to show the importance of effective control measures and procedures in dealing with money laundering and terrorist financing risks; the banks concerned have taken remedial measures (if applicable) to the identified deficiencies; and the above three banks have not had previous disciplinary records relating to the Anti-Money Laundering Ordinance and have shown cooperation in the investigation and enforcement procedures of the Hong Kong Monetary Authority.

Chen Jinghong, Assistant Chief Executive (Regulation and Anti-Money Laundering) of the Hong Kong Monetary Authority, said, “Effective transaction monitoring measures enable banks to identify and report suspicious transactions in a timely manner, and are therefore an important part of banks' anti-money laundering and terrorist financing control measures. Bank management should ensure that banks have proper transaction monitoring systems and procedures, and promptly correct deficiencies when found.”