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Hong Kong Monetary Authority (HKMA) Enforcement Action: Commerzbank

26 Aug 2022

The Monetary Authority takes disciplinary action against Commerzbank AG, Hong Kong Branch for contraventions of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance

The Hong Kong Monetary Authority (HKMA) announced today (26 August) that it had completed an investigation and disciplinary proceedings for Commerzbank AG, Hong Kong Branch (CBHK) under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615 of the Laws of Hong Kong) (AMLO) (Note 1). The Monetary Authority (MA) has imposed a pecuniary penalty of HK$6,000,000 against CBHK for contraventions of the AMLO.

The disciplinary action (Note 2) follows an on-site examination and further investigation by the HKMA on CBHK’s systems and controls for compliance with the AMLO. The control lapses identified in the investigation relate to conducting customer due diligence (CDD) before establishing business relationships during the period between April 2012 and June 2016. CBHK also failed to establish and maintain effective procedures for carrying out its duties under the AMLO in relation to conducting CDD and implementing name screening mechanism of customers’ beneficial owners during this period.

In deciding the disciplinary action, the MA took into account the relevant circumstances and factors, including the following:(a) The seriousness of the investigation findings;(b)The need to send a clear deterrent message to CBHK and the industry about the importance of effective controls and procedures to address money laundering and terrorist financing risks;(c)CBHK’s remedial actions to address the deficiencies identified by the HKMA; and(d)CBHK has no previous disciplinary record in relation to the AMLO and cooperated with the HKMA during the investigation and enforcement proceedings.

Ms Carmen Chu, Executive Director (Enforcement and AML) of the HKMA, said, “As the first line of defence, carrying out CDD measures upon customer on-boarding is fundamental to combating money laundering and terrorist financing and thereby maintaining the integrity of the banking system of Hong Kong. Banks should make reference to the HKMA’s relevant guidelines and circulars in reviewing and optimising the performance of their anti-money laundering and counter-financing of terrorism control systems on an on-going basis, to ensure that the design and implementation of their policies and procedures remain effective.”

Notes:

1. Prior to 1 March 2018, the short title of Chapter 615 of the Laws of Hong Kong was the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance.

2.The disciplinary action is taken under section 21 of the AMLO. The AMLO imposes CDD and record-keeping requirements on specified financial institutions, including Authorized Institutions, and designated non-financial businesses and professions. As regards Authorized Institutions, the MA is the relevant authority under the AMLO.

Links:

HKMA Notice

Statement of Disciplinary Action

Categories: Anti-Money Laundering Civil Monetary Penalties Enforcement Actions HKMA Updates

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