The Financial Action Task Force (“FATF”) is an inter-governmental body based in Paris who seek to promote effective implementation of legal, regulatory and operational measures to combat money laundering and terrorist financing. The FATF monitors and evaluates member countries’ compliance with anti-money laundering (“AML”) and counter terrorist financing (“CTF”) recommendations by undertaking audits and publishing mutual evaluations for the respective jurisdictions.
2018 is a pivotal year for Hong Kong as the next FATF mutual evaluation is scheduled to commence in late October to early November.
In an effort to minimise the regulatory gap between Hong Kong’s AML and CTF regime and the 2008 FATF recommendations, the Anti-Money Laundering and Counter Terrorist Financing (Financial Institutions) Ordinance Cap 615 (“AMLO”) extended its ambit on the 1st of March 2018 by imposing a statutory customer due diligence (“CDD”) and record keeping requirement on designated non-financial businesses and professions (“DNFBPs”). These include namely: solicitors, foreign lawyers, accountants, real estate agents and, trust and company service providers (“TCSPs”).
Effectively, the imminent FATF mutual evaluation will not only scrutinise financial institutions’ compliance but also that of DNFBPs.
Importantly, FATF recommendations set the benchmark for international standards for combating money laundering and terrorist financing. The report will undoubtedly have an impact on Hong Kong’s economic reputation as a leading financial services sector. The question remains: how will Hong Kong fare?