February 22, 2018: HK SFC AML/CTF Circular on regulatory changes

Circular to Licensed Corporations and Associated Entities 

Anti-Money Laundering / Counter-Terrorist Financing

Amendments to Anti-Money Laundering and Counter-Terrorist Financing Guidelines

The Securities and Futures Commission (“SFC”) published in the Gazette today (G.N. 1227 of 
2018) Note 1 two revised guidelines, namely:

  • Guideline on Anti-Money Laundering and Counter-Terrorist Financing (“the Guideline”); and
  • Prevention of Money Laundering and Terrorist Financing Guideline issued by the SFC for Associated Entities (“the Guideline for AEs”),

to incorporate provisions which reflect the relevant amendments in the recently enacted Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) (Amendment) Ordinance 2018 (“the Amendment Ordinance”) Note 2 . 

These provisions are mainly related to the followings:

(a)  aligning the threshold of defining beneficial ownership from the current “not less than 10%” to “more than 25%”, having regard to the prevailing Financial Action Task Force (“FATF”) standard and international practice;

(b)  introducing flexibility to measures permitted to be taken for verifying a customer’s identity, in the light of technological development in the methods used by financial institutions for obtaining information relating to customers;

(c)  permitting financial institutions to rely on foreign financial institutions within the same financial group as intermediaries to carry out customer due diligence measures;

(d)  reflecting the current criteria relating to wire transfers Note 3 in the FATF recommendations by requiring the recording of basic information about a recipient and, where applicable, an intermediary institution involved in a transaction; and

(e)  changing the record-keeping period from “six years” to “at least five years”.

These revised guidelines will come into effect on 1 March 2018.  Marked-up amendments to the Guideline and the Guideline for AEs are set out in Appendix 1 and Appendix 2 to this circular respectively.

Licensed corporations and associated entities should review their existing policies and procedures in light of the changes in the revised guidelines and take any necessary steps to ensure continued compliance with all applicable requirements of these guidelines.

Should you have any queries regarding the contents of this circular, please contact Ms Kiki Wong on 2231 1569.

Intermediaries Supervision Department
Intermediaries Division
Securities and Futures Commission

Enclosure

End

SFO/IS/011/2018

Note 1 The gazette notice can be found on the Government’s website (https://www.gld.gov.hk/egazette/pdf/20182208/egn201822081227.pdf).
Note 2
 Please refer to our circular issued on 5 February 2018 re the gazettal of the Amendment Ordinance (http://www.sfc.hk/edistributionWeb/gateway/EN/circular/aml/aml-regulations/doc?refNo=18EC8) and our circular issued on 26 June 2017 re the gazettal of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) (Amendment) Bill 2017(http://www.sfc.hk/edistributionWeb/gateway/EN/circular/aml/aml-regulations/doc?refNo=17EC38).
Note 3
 The requirements relating to wire transfers primarily apply to authorized institutions and money service operators.

Links:

HK SFC Notice

HK SFC Circular

Appendix 12

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