Hong Kong Acts On Terrorists, Money-Laundering

by Mary Swire, Tax-News.com, Hong Kong

01 October 2001

In a response to President Bush's Executive Order last week requiring banks to close accounts linked to Osmana bin Laden, David Carse, deputy chief executive of the Hong Kong Monetary Authority, said that banks should review accounts to check any suspicious connection with terrorist activities. Later in the week, in a related move, the Securities and Futures Commission (SFC) issued an advisory circular to all registered intermediaries advising them to give special attention to business relations and transactions with persons from 19 jurisdictions identified by the Financial Action Task Force (FATF) as non-cooperative countries and territories (NCCTs) in the fight against money laundering. The 19 NCCTs are: Cook Islands; Dominica; Egypt; Guatemala; Grenada, Hungary; Indonesia; Israel; Lebanon; Marshall Islands; Myanmar; Nauru; Nigeria; Niue; Philippines; Russia; St. Kitts and Nevis; St. Vincent and the Grenadines; and Ukraine.

The FATF, of which Hong Kong is a member, published this revised list of NCCTs earlier this month, and calls on its members to apply the above counter-measure over the NCCTs.

Furthermore, said the SFC, in view of the inadequate progress made by the Philippines to address the serious deficiencies in its anti-money laundering regime, the FATF decided to impose additional counter-measures on the country beginning from 30 September 2001. In this regard, registered intermediaries are advised to:

• clearly ascertain the customers' background and the expected level and nature of account activities for new customers from the Philippines;
• accept new accounts opened through intermediaries, e.g. lawyers, accountants and company formation agents, etc. that operate solely in the Philippines only after having completed proactive verification procedures and are satisfied about the customer's background and the source of funds;
• pay special attention to the on-going monitoring of the activities of new accounts and follow up significant deviations from the expected level and nature of activities, and if deemed appropriate, report suspicious transactions to the Joint Financial Intelligence Unit immediately; and
• include the subject of NCCTs with special emphasis on the Philippines in staff training programmes in respect of money laundering.

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