FATF issues Mutual Evaluation of Hong Kong
15-Aug-2008The Financial Action Task Force (FATF) published its assessment of the implementation of anti-money laundering and counter-terrorist financing (AML/CFT) standards in Hong Kong, China on 21 July 2008.
It found that Hong Kong had a good legal structure to combat money laundering (ML) and terrorist financing (TF). The ML offence, it said, is broad and almost fully meets the FATF requirements. It is well prosecuted with a satisfactory conviction rate.
But the TF offence, said the FATF, does not cover provision or collection for an individual terrorist or terrorist organisation. It also applies only to "funds" but not non-financial assets and does not extend to terrorism directed towards international organisations. Terrorist funds have not been detected in Hong Kong and there have been no prosecutions for TF.
While Hong Kong has a fairly comprehensive criminal confiscation regime, these measures are not available in all cases, do not extend to all predicate offences and the number of confiscations is relatively low. Legislative provisions enacted for confiscation of the proceeds of TF are not yet in force.
The FATF said Hong Kong's financial intelligence unit, the Joint Financial Intelligence Unit (JFIU), was effective.
The preventive system addresses customer identification and other AML/CFT obligations and applies to a range of financial institutions and some designated non-financial businesses and professions (DNFBPs). But the preventive system for some non-core financial institutions does not incorporate adequate customer due diligence requirements with respect to politically exposed persons.
While the volume of suspicious transaction reports (STRs) has increased in recent years, said the FATF, the submission of STRs by DNFBPs could be improved and the supervision of many is weak or non-existent.
The range of sanctions available for AML/CFT breaches is broad for core financial institutions other than insurance and is appropriately employed by the supervisory authorities.
Hong Kong offers a wide range of mutual legal assistance. The extradition regime is uncomplicated and not subject to unreasonable grounds for refusal. Authorities provide a wide range of international co-operation to their foreign counterparts and have effective gateways to facilitate prompt and constructive exchange of information.
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