The AML/CFT Framework in Hong Kong
Hong Kong maintains a robust anti-money laundering and counter-terrorist financing (AML/CFT) regime aligned with FATF recommendations. The primary legislation includes the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO, Cap. 615), which imposes customer due diligence (CDD) and record-keeping obligations on financial institutions and designated non-financial businesses and professions (DNFBPs).
Who Is Subject to AML Obligations?
DNFBPs include accountants, lawyers, real estate agents, company service providers, and dealers in precious metals. Trust or Company Service Providers (TCSPs) must be licensed by the Companies Registry and are subject to enhanced AML supervision.
Core AML Obligations
- Customer Due Diligence (CDD): Identifying and verifying the identity of customers and beneficial owners
- Enhanced Due Diligence (EDD): Additional scrutiny for higher-risk customers including PEPs
- Ongoing Monitoring: Continuously monitoring business relationships
- Record Keeping: Retaining CDD and transaction records for at least five years
- Suspicious Transaction Reporting: Filing STRs with the Joint Financial Intelligence Unit (JFIU)
Case Study: TCSP Compliance Programme
A Hong Kong corporate services firm holding a TCSP licence engaged Aaron Wong & Co. to review and strengthen its AML compliance programme following a Companies Registry inspection. Aaron Wong & Co. conducted a full gap analysis, redesigned CDD intake forms, implemented a risk-scoring matrix, and drafted a revised AML Policy Manual. Staff training was also conducted to embed the new procedures.
Penalties for Non-Compliance
Breaches of AML obligations under the AMLO can result in civil penalties of up to HK$1,000,000 per contravention, as well as revocation of licences. Criminal liability for money laundering offences carries a maximum penalty of 14 years’ imprisonment and an unlimited fine.