The mutual evaluation of Hong Kong was a subject of discussion at the Financial Action Task Force (FATF)’s recent plenary meeting in Orlando, Florida (19-21 June 2019). This follows the FATF’s on-site visit to Hong Kong late last year.
The FATF expects to publish its finalised report on Hong Kong by September 2019, after a quality and consistency review. The report is prepared based on the FATF’s methodology for assessments, which requires jurisdictions to take into account the effectiveness with which anti-money laundering and counter-terrorist financing (AML/CFT) measures are implemented, as well as technical compliance of each of the FATF’s recommendations.
The plenary discussed the assessment of Hong Kong and concluded the following:
Hong Kong has “a strong legal foundation to underpin its AML/CFT regime”. It “understands its risks, has effective measures to combat terrorist financing and to confiscate the proceeds of crime, and actively cooperates with international partners”.
“However, it needs to prioritise efforts to prosecute [money laundering] linked to foreign predicates, increase risk understanding and AML/CFT implementation by smaller institutions, and strengthen supervisory measures for some sectors.”
The FATF evaluation in the recent years has provided an impetus for the Hong Kong government and regulators to enhance the AML/CFT regime and step up on enforcement actions (see our e-bulletins of March 2019, September 2018 and May 2018). Most recently, the Hong Kong Monetary Authority concluded its thematic review and mystery shopping programme (see reports 1 and 2) relating to account opening and onboarding of certain customers. In addition, under the new AML/CFT-focused licensing regime for trust and company service providers (TCSPs), there has been a wave of enforcement action by the Companies Registry against TCSPs for operating without a licence, with 22 successful prosecutions so far.