Hong Kong: The Hong Kong Monetary Authority (“HKMA”) reprimanded and fined State Bank of India’s Hong Kong branch (“SBIHK”) for internal control failures relating to its Anti-Money Laundering and Counter-Terrorist Financing system

On 31 July 2015, the HKMA published its Statement of Disciplinary Action against SBIHK for failing to carry out money laundering checks and establish appropriate procedures in accordance with the Anti-Money Laundering and Counter- Terrorist Financing (Financial Institutions) Ordinance (“AMLO”).

SBIHK was publicly reprimanded by the HKMA and fined HK$ 7,500,000 (approximately US$ 1 million). SBIHK was also required to appoint an independent external advisor to monitor its remedial plan for addressing the contraventions.

This is the first enforcement action initiated by the HKMA for contravention of the AMLO (in force since 2012). The AMLO stipulates requirements for financial institutions in relation to their customer due diligence and record-keeping. The Director-General (Enforcement) of the HKMA, Ms. Meena Datwani, said that the HKMA “wants to send a clear message to the industry that all authorized institutions should have effective AML/CTF systems and controls in place to, among other things, detect and report suspicious transactions based on their knowledge of their customers”.