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Hong Kong Consults On Cross-Border Cash Controls

by Mary Swire,, Hong Kong

22 July 2015

As part of its framework of measures on anti-money laundering and the counter-financing of terrorism (AML/CFT), Hong Kong's Security Bureau has launched a three-month public consultation on the establishment of a reporting system on the physical cross-boundary transportation of large quantities of currency and bearer negotiable instruments (CBNIs).

A spokesman for the Security Bureau said: "This is an effort to move towards compliance with standards established under Recommendation 32 (R32) of the Financial Action Task Force (FATF). The purpose [of R32] is to enable law enforcement agencies to detect and stop the physical movement of illicit funds across the boundaries of different jurisdictions."

According to the Government's R32 proposal, passengers arriving in Hong Kong carrying CBNIs valued at over HKD120,000 (USD15,480) should make a declaration when undergoing Customs clearance. Those leaving Hong Kong will need to disclose the amount of CBNIs carried when asked by a Customs officer.

Persons responsible for the import or export of cargoes containing CBNIs above the designated threshold should make an advance declaration through an electronic system, in line with the existing systems for the clearance of cargoes.

The spokesman added that "the proposed reporting requirements accompany existing Customs clearance practices, and seek to facilitate compliance by members of the public and minimize disturbance caused in view of the huge volume of passenger and cargo flow into and out of Hong Kong every day."

The R32 system is not and should not be regarded as a currency control, he said. Members of the public will still be free to bring or transport any amount of cash into and out of Hong Kong. They would need only report these amounts, if they are above the designated threshold.

Hong Kong is the only FATF member jurisdiction, among 34, that has yet to establish an R32 system. In practice, R32 is the only area where Hong Kong's AML/CFT regime was still rated as "non-compliant." The last round of FATF investigations into Hong Kong's AML/CFT regime was completed in 2008, and the next round is expected in 2018.

TAGS: money-laundering | compliance | law | international financial centres (IFC) | enforcement | offshore | Hong Kong | standards | regulation | Financial Action Task Force (FATF)

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