Hong Kong Enlists Banks' Support In Anti-Money Laundering Drive

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

18 June 2001

About 200 representatives from the banking sector attended anti-money laundering seminars organised by the Narcotics Division of the Hong Kong Security Bureau last week on June 12 and 13. The aim of the seminars was to update the banking sector on international standards of anti-money laundering practices and to inform the sector of the Government's latest proposals to enhance the anti-money laundering legislative regime in Hong Kong.

Speaking at the two-day event, entitled 'Anti-Money Laundering Seminar for Authorized Institutions', the Commissioner for Narcotics, Mrs Clarie Lo, said the banking sector had an important role to play in curbing money laundering and safeguarding Hong Kong's integrity and reputation as an international financial centre. The compliance officers, in particular, are the gatekeepers and whistle blowers in the fight against money laundering she claimed.

According to Mrs Lo, due to the concerted efforts of the Government, the regulators and the private sector, the number of suspicious transaction reports has increased more than ten times in the past six years, from 550 in 1994 to 6,104 in 2000. Of these reports, more than 95 per cent came from the banking sector.

Principal Assistant Secretary for Security (Narcotics), Ms Mimi Lee briefed the seminar on the FATF's on-going Non-Cooperative Countries and Territories (NCCT) exercise in which countries/territories which were determined to have detrimental rules and practices that impeded their cooperation in the international fight against money laundering would be put on a list and made to address their deficiencies. 'The impact of the NCCT exercise on Hong Kong is that we need to keep on improving our anti-money laundering regime and preventing our systems from being affected by loopholes identified in other countries' anti-money laundering regimes,' she claimed.

Ms Lee also urged authorized institutions in Hong Kong to give special attention to business relations and transactions with persons, including companies and financial institutions, from the non-cooperative countries/territories.

Hong Kong has been a member of FATF since 1990, and on July 1, 2001, Mrs Lo, who is the overall coordinator of anti-drug and money laundering matters, will take up the duties of the FATF President for 2001/2002.

Early this year, the Narcotics Division has issued, through the Hong Kong Monetary Authority and other regulators, an advisory informing all concerned financial institutions about the NCCT exercise and measures advised by the FATF. The latest legislative amendment proposals were then introduced to improve the anti-money laundering provisions in the Drug Trafficking (Recovery of Proceeds) Ordinance and the Organized and Serious Crimes Ordinance.

The Drug Trafficking and Organized Crimes (Amendment) Bill 2000, was introduced into the Legislative Council in November last year and aims to further enhance the effectiveness of Hong Kong's anti-money laundering regime. It is now being scrutinised by the Legislative Council.

Another key government proposal will be to add a new section to the existing Ordinances to provide that a person commits an offence if, having reasonable grounds to suspect that any property represents any person's proceeds of drug trafficking or an indictable offence, he still deals with the property.

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