Hong Kong Provides Guidance to Fight Financial Crimes Emerging from COVID-19

The Monetary Authority in Hong Kong (HKMA) has issued new guidelines for the banks on merging external source data into Anti-Money Laundering and Counter-Terrorism Financing control system to amplify the effectiveness. The new guidelines promote internal and external data source use. 

These guidelines are due to a thematic review that was conducted as a part of HKMA’s reaction to the rising threat of fraud emerging due to COVID-19. The fraud includes mule account networks, investment scams, identity theft, and money laundering. 

The thematic review conducted by HKMA consists of detailed analyses of banks’ procedure for managing and utilising information and data from a variety of sources including the recommendations given by the Fraud and Money Laundering Taskforce (FMLIT), an establishment in Hong Kong-based on public and private partnership. 

The HKMA investigated this data given to banks’ input into the broader AML/CFT environment which includes the suspicious transaction reports, the prevention of funds that are considered to be fraud-related, and the elimination of risks in the banking industry.

The issued guidelines also highlight the good actions taken by some banks and financial institutions in adopting Regtech in order to comply with their AML/CFT requirements. 

The main observation and applauded measures include how AML/CFT systems must support the merging of external data and information, and the findings from the institutions that have a strong system to enhance their AML/CFT measures by the use of such information and data. 

The report also highlights the examples of how various banks with different sizes and complexity are utilising external data and information to manage the emerging risks related to the COVID-19 pandemic through active data analysis and information sharing. 

According to the HKMA, the banking industry is now expected to take on the most suitable arrangements, commensurate with their size, risks and scope of business, to maximise the performance of the system of AML/CFT by referring to main observations and good examples shared from the thematic review.