HKMA Issues Mandate to Encourage Innovation in AML/CFT
Hong Kong’s Monetary Authority is set to launch interactive lab sessions to experiment with innovations that can be used to enhance AML/CFT efforts.
The initial focus of launching AML and Financial Crime Regtech Labs will be to experiment with new technologies and emerging data analytic techniques. The plan will come into effect in November 2021.
HKMA announced that the interactive lab sessions will allow experimentation in a facilitated environment using simulations of real-life AML/CFT Regtech use cases. NLP (Natural Language Processing) and network analytics will be the main focus in the first experiment.
This plan has been launched as part of a wider “Fintech 2025” strategy to encourage the use of AML/CFT technologies in the banking sector. The circular issued to the banks states that the initiative will promote network analytics capabilities to combat online frauds and money mule networks.
In the fourth quarter of 2021, the HKMA will also be conducting a review on the progress made by the Fraud and Money Laundering Intelligence Taskforce (FMLIT) member banks for the efficient development of network analytics. The findings will then be shared with the wider industry in 2022.
Furthermore, the HKMA will be working closely with the existing AML/CFT framework of the country to gather suggestions and gain stakeholder interest for the promotion of innovative technologies to tackle AML/CFT issues.
@hkmagovhk has issued its second Regtech Adoption Practice Guide, which focuses on Regtech solutions assisting Anti-Money Laundering/Counter-Financing of Terrorism efforts in the area of ongoing monitoring of customers.
Read more: https://t.co/ORUEYe9Dy8@KPMGChina pic.twitter.com/Jlv3e3uXJs
— HKMA 香港金融管理局 (@hkmagovhk) July 26, 2021
Further details are expected to be announced in November at the Hong Kong Fintech Week, 2021. The above-mentioned initiative will fall under the HKMA’s Fintech Supervisory Sandbox 3.0 and other innovative events.
The circular has come forth following the recent report issued by the global financial watchdog, the Financial Action Task Force (FATF) regarding the use of machine learning and natural language processing to improve the speed, quality, and efficiency of AML/CFT measures.
“In line with global efforts, the HKMA plans to take further steps to support AML/CFT innovation and help strengthen [banks’] implementation of the risk-based approach to AML/CFT,” the HKMA said.
Banks have been directed to provide required information to the HKMA on an urgent basis so that an updated review over AML and Financial Crime Regtech adoption can be presented. Details will be communicated with individual banks shortly. Analysis of the provided data will be disclosed in a September webinar.
Suggested Read: FATF’s June 2021 Plenary – Strategic and Country-specific Initiatives
