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HKMA Enforcement Action: Cathay United Bank Company to pay HKD 11MM penalty

23 Sep 2022

The Monetary Authority takes disciplinary action against Cathay United Bank Company, Limited, Hong Kong Branch for contraventions of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance

The Hong Kong Monetary Authority (HKMA) announced today (23 September) that it had completed an investigation and the disciplinary proceedings for Cathay United Bank Company, Limited, Hong Kong Branch (CUBHK) 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$11,000,000 against CUBHK for contraventions of the AMLO.

The disciplinary action (Note 2) follows an on-site examination and further investigation by the HKMA on CUBHK’s systems and controls for compliance with the AMLO. The control deficiencies identified in the investigation relate to conducting on-going customer due diligence (CDD) and enhanced customer due diligence (EDD) in respect of high risk situations during the period between April 2012 and February 2016. CUBHK failed to establish and maintain effective procedures for carrying out its duties under the AMLO in relation to on-going CDD and EDD during this period. In addition, CUBHK failed to take all reasonable measures to ensure that proper safeguards exist to prevent the contraventions and to mitigate money laundering or terrorist financing (ML/TF) risks.

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 CUBHK and the industry about the importance of effective controls and procedures to address ML/TF risks;(c)CUBHK’s remedial and enhancement measures taken to address the deficiencies identified by the HKMA; and(d)CUBHK 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, “Senior management oversight is a vital part of effective ML/TF risk management framework of banks. In discharging the relevant legal and regulatory obligations, banks should have a clear understanding of risks and ensure adequate resources to support timely and proactive follow-up of anti-money laundering and counter-financing of terrorism related issues, with effective coordination across the entire institution. Banks should make reference to the HKMA’s relevant guidelines and circulars in adopting appropriate governance systems for ML/TF risk management.”

Relevant link: Statement of Disciplinary Action


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 customer due diligence 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.

And here is the Statement of Disciplinary Action:


HKMA Notice

Statement of Disciplinary Action

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


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