FATF considers Hong Kong's measures to be effective

Financial Action Task Force considers Hong Kong's measures to be effective, but could improve

While Hong Kong has a good legal structure to combat money laundering (ML) and terrorist financing (TF), measures taken to prevent such cases form occurring could be improved, according to a report by the Financial Action Task Force (FATF).

The FATF completed an assessment on the SAR last month, of the implementation of anti-money laundering and counter-terrorist financing (AML/CFT) standards in Hong Kong, coming to several conclusions about the city's ability to protect itself against underhanded monetary practices.

Amongst their findings, the FATF state that “Hong Kong has a good legal structure to combat money laundering (ML) and terrorist financing (TF)” with a broad offence that almost meets the FATF's requirements. They add that “it is well prosecuted with a satisfactory conviction rate.”

Yet, they point out that the TF does not “cover provision/collection for an individual terrorist or terrorist organisation” nor does the offence apply to non-financial assets or “extend to terrorism directed towards international organisations.”

Nevertheless, terrorist funds have not been detected in Hong Kong and there have been no prosecutions for TF.

And while Hong Kong “has a fairly comprehensive criminal confiscation regime,” this doesn't extend to all cases such as predicate offences. In addition, “legislative provisions enacted for confiscation of the proceeds of TF are not yet in force,” according to the statement.

Meanwhile, Hong Kong’s financial intelligence unit, the Joint Financial Intelligence Unit (JFIU), is considered effective.

Prevention takes the form of customer identification which applies to a range of financial institutions and some designated non-financial businesses and professions (DNFBPs) but is limited for non-core financial institutions.

According to the statement, “the preventive system for some non-core financial institutions does not incorporate adequate customer due diligence requirements with respect to politically exposed persons.”

And while the number of suspicious transaction reports (STRs) has increased, the submission of these reports by the DNFBPs could be improved.

Finally, Hong Kong's extradition regime is considered uncomplicated and “not subject to unreasonable grounds for refusal.”

Additionally, authorities are seen to provide a great deal of international cooperation as well as the facilitates to exchange “prompt and constructive exchange of information.”

Source: Macau Daily Times