Chinese Officials to Face Scrutiny Over their Financial Affairs in Hong Kong
Hong Kong’s banks will take extra measures to monitor transactions by Chinese politically connected officials.
Hong Kong has tightened their money laundering regulations to monitor the Chinese mainland officials who have used the territory in hiding their ill-gotten wealth. The government of Hong Kong has brought these changes to financial institutions and require them to check on the bank accounts and transactions of the Chinese Politically Exposed Persons.
The current regulations only require AML checks on the politically exposed persons out of China. Now the financial watchdogs of Hong Kong have proposed that these anti-money laundering regulations must be applied to everyone outside of the territory.
Alan Linning, a partner at law firm Mayer Brown, speaks about the significance of these amendments.“The amendment will make it crystal clear to banks, lawyers, accountants and others in Hong Kong that the enhanced due diligence requirements that apply to foreign PEPs must also be applied to PEPs from China. Banks and law firms will have to treat all PEPs from China on their clients’ lists as high-risk customers.”
The government of China has already been concerned about the illicit financial flow of the funds outside the country and it has taken measures to stop the officials and other individuals to hide their wealth outside the jurisdiction like Hong Kong. President Xi Jinping has shown that omitting corruption has been the main focus of the leadership and to catch both high level and low ranking bureaucrats that take part in illicit financial flow.
President Xi has appointed an anti-corruption tsar, Shi Kehui, who will observe the affairs of local officials. These new plans will also bring the nation in line with the framework recommended by the Financial Action Task Force (FATF).