May 31, 2018: HK SFC AML/CTF Circular

Circular to Licensed Corporations and Associated Entities 

Anti-Money Laundering / Counter-Terrorist Financing

Amendments to the United Nations (Anti-Terrorism Measures) Ordinance 

The United Nations (Anti-Terrorism Measures) (Amendment) Ordinance 2018 (“Amendment Ordinance”) Note 1 was enacted by the Legislative Council on 21 March 2018 and came into effect on 31 May 2018.  The Amendment Ordinance aims at further implementing the United Nations Security Council Resolution 2178 and the Financial Action Task Force’s recommendation to combat the threats posed by foreign terrorist fighters and enhance the freezing mechanism on terrorist property.

The Amendment Ordinance introduces the following new provisions, among others, which are likely to be relevant to licensed corporations (“LCs”) and associated entities (“AEs”):

(1)  New section 8A prohibits, except under the authority of a licence granted by the Secretary for Security, dealing, directly or indirectly, with any property knowing that, or being reckless as to whether, the property is –

(a)     terrorist property specified under section 4 or 5;

(b)     wholly or jointly owned or controlled, directly or indirectly, by a terrorist or terrorist associate specified under section 4 or 5; or

(c)     held by a person on behalf of, or at the direction of, a terrorist or terrorist associate specified under section 4 or 5.

(2)  New section 11L prohibits provision or collection, by any means, directly or indirectly of any property –

(a)     with the intention that the property will be used; or

(b)     knowing that the property will be used, in whole or in part, to finance the travel of any person between states for a specified purpose  Note 2 (whether or not the property is actually so used).

LCs and AEs should take note of these and other new provisions in the Amendment Ordinance and consider the implications for their anti-money laundering and counter-financing of terrorism controls, in particular whether any adjustments are needed to sanctions screening and transaction monitoring systems.

Furthermore, LCs and AEs are reminded to refer to Chapter 6 of the Guideline on Anti-Money Laundering and Counter-Terrorist Financing (“AML Guideline”) which contains guidance on the appropriate measures that LCs and AEs should take to ensure compliance with the United Nations (Anti-Terrorism Measures) Ordinance Note 3

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

End

SFO/IS/030/2018

Note 1 The Amendment Ordinance can be found on the Government’s website (https://www.gld.gov.hk/egazette/pdf/20182213/es12018221314.pdf).
Note 2
 “Specified purpose” means (a) the perpetration, planning or preparation of, or participation in, one or more terrorist acts (even if no terrorist act actually occurs); or (b) the provision or receiving of training that is in connection with the perpetration, planning or preparation of, or participation in, one or more terrorist acts (even if no terrorist act actually occurs as a result of the training).
Note 3
 Under paragraph 6 of the Prevention of Money Laundering and Terrorist Financing Guideline issued by the Securities and Futures Commission for Associated Entities, AEs that are not authorized financial institutions are expected to have regard to the provisions of the AML Guideline as if they were themselves LCs.

Links:

HK SFC Circular

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