Trade based money laundering - HKMA & MAS strengthen enforcement principles
Both Singapore's MAS and Hong Kong's HKMA are strengthening their enforcement measures for the financial industry.
In a revised supervisory policy manual for banks, The Hong Kong Monetary Authority (HKMA) has outlined three levels of enforcement measures that it may take.
The first consists of encouraging the adoption of good practices whereby the HKMA would share good practices with banks and encourage those which have not yet taken them to do so.
The second level would apply where deficiencies in controls or practices at the banks are identified. Banks would have to take corrective action, and where there may be systemic issues, the bank would have to undertake more stringent measures such as commissioning an independent review of the relevant problems and addressing the review’s findings.
The third level of action by the HKMA would apply where evidence is found of misconduct by the bank or its staff. Here, the HKMA may refer the case to its enforcement department for potential enforcement, or may take other actions such as referring the case to the Securities and Futures Commission (SFC) for investigation or to take disciplinary actions.
This announcement shows an effort to enhance transparency around the HKMA’s risk-based approach to market supervision.
In Singapore, the Monetary Authority of Singapore (MAS) announced recently that it will form dedicated departments to combat money laundering and to strengthen enforcement.
“While MAS has in place a robust regime to protect the integrity of Singapore’s financial system, the increasing complexities of transnational flows necessitates heightened supervisory focus on combatting money laundering and other illicit financing activities.
A strong enforcement capability is necessary to conduct rigorous investigations of suspected violations and misdemeanours and to take swift actions to establish culpability and punish as appropriate the institutions or individuals who have breached MAS’ regulations," MAS added in its news release.
This announcement comes only weeks after the MAS’ action against BSI Bank for significant anti-money laundering controls failures, and reflects its focus on AML issues over the last year.
These announcements are consistent with a trend around Asia to strengthen the enforcement of rules within the financial sector.
