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Banks could face fines in anti-money laundering law compliance probe

Deficiencies could mean multimillion-dollar fines for banks, says HKMA deputy chief

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Arthur Yuen says it is time to get tough to ensure all banks are complying with the anti-money laundering law. Photo: Sam Tsang

Some banks in Hong Kong may have failed to meet the city's anti-money laundering requirements and could potentially face multimillion-dollar fines, Hong Kong Monetary Authority deputy chief executive Arthur Yuen Kwok-hang said on Wednesday.

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"The authority is investigating some banks over their deficiencies in adhering to the high standards set out in the anti-money laundering law introduced in 2012," Yuen told reporters at an informal gathering. "We are still in the process of investigating and collecting evidence. We would first need to conclude our investigation before deciding if any penalty action would need to be taken."

Yuen declined to name the banks or say how many of them are under investigation. "What I can say is there is more than one," he said.

He said the investigations had revealed two major problems.

"Firstly, some banks do not have sufficient systems in place for background checks of clients. Under the new anti-money laundering law, all banks or financial institutions must have a 'know your client' system and procedures to have due diligence to check if the new clients may be involved in money laundering activities," he said.

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"Another major problem is that some banks do not have a good record-keeping system to monitor suspicious transactions for reporting. This may be related to some banks having not yet invested sufficient technology and manpower into the new requirements."

As the city's banking regulator, the HKMA can directly impose penalties for breaches of the anti-money laundering law, without any prosecution.

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