The below are examples of measures that would not generally be acceptable:

(a) failing to properly apply risk-based approach – source of wealth requirements (particularly when conducting verification) are not sufficiently risk-based, such as applying the same measures to customers of varying risks or collecting too little or too much information;

(b) taking information provided by clients at face value – always accepting a customer’s explanation and material provided for source of wealth at face value, without probing further even where red flags are raised or raising insufficient challenge to source of wealth information;

(c) over-reliance – on undocumented information, particularly, relying on a self-declaration by the customer as to its source of wealth without verifying the information in the customer declaration through reliable external or internal sources;

(d) relying on intra-group introductions – where overseas standards are not equivalent to Hong Kong or where due diligence data is inaccessible because of legal constraints;

(e) granting waivers from establishing source of wealth where it is mandatory; and

(f) failing to distinguish – between a customer’s source of wealth and source of funds.