The Hong Kong Monetary Authority (HKMA) imposed a penalty of HKD4m ($0.51m) on Fubon Bank Hong Kong (FBHK) following an investigation under the anti-money laundering (AML) and counter-terrorist financing (CTF) ordinance (AMLO).
This disciplinary action follows FBHK’s self-reporting of failures in its transaction monitoring systems, which led to an HKMA probe into the bank’s systems and controls for compliance with the AMLO.
The investigation revealed that between April 2019 and July 2022, FBHK failed to execute effective procedures to continuously monitor business relationships with customers.
Specific issues identified included inadequate processes for managing system changes, addressing a significant reduction in transaction alerts, and maintaining regular reviews of the transaction scope covered by its monitoring system.
Additionally, FBHK was found to have insufficient scrutiny for certain customer transactions and failed to update customer due diligence during significant trigger events.
For determining the disciplinary action, the Monetary Authority considered the seriousness of the findings and the need to emphasise stringent AML standards within the banking sector.
The HKMA also took into account FBHK’s cooperation throughout the investigation, its proactive reporting of transaction monitoring issues, and the remediation actions it undertook to address the deficiencies identified.
The bank’s previously flawless disciplinary record was also factored into the decision.
HKMA took the disciplinary action under section 21 of the AMLO. The AMLO mandates customer due diligence and record-keeping requirements for specified financial institutions, including authorised institutions, designated non-financial businesses and professions.
HKMA Enforcement and AML executive director Raymond Chan said “The AMLO requires banks to put in place effective procedures for continuous monitoring of their business relationships with customers so that potential money laundering and terrorist financing activities are detected early.
“When changes are introduced to existing monitoring systems, bank management should ensure that the scope of surveillance covers all relevant transactions and any identified deficiencies are followed up promptly.”
