The Securities and Futures Commission (SFC) has launched a three-month consultation on proposals to amend its anti-money laundering and counter-financing of terrorism (AML/CFT) guidelines for licensed corporations (LCs) and associated entities (AEs). The proposed amendments aim to align the AML/CTF guidelines with the Guidance for a Risk-based Approach for the Securities Sector (RBA Guidance) issued by the Financial Action Task Force (FATF) on 26 October 2018, and facilitate participants of the securities sector with implementing AML/CTF measures using a risk-based approach.
The following key aspects from the RBA Guidance are incorporated into the proposed amendments:
- the methodology of money laundering (ML) and terrorist financing (TF) risk assessment as well as indicators of a higher or lower risk level associated with specific risk factors which should be considered in the assessment;
- the risk mitigating policies, procedures and controls for customer due diligence and ongoing monitoring in risk situations including:
- additional measures to mitigate risks associated with business relationships in the securities sector e.g. cross-border correspondent banking relationships;
- an expanded list of possible simplified and enhanced measures for customers assessed to be either of lower or higher ML/TF risk; and
- an expanded list of red-flag indicators of suspicious transactions and activities.
The proposed amendments also address certain areas requiring enhancement identified in the latest Mutual Evaluation Report of Hong Kong published by the FATF on 4 September 2019 (to read our previous blog post, please click here). In addition, the relevant guidance on AML/CTF measures applicable to LCs and AEs currently set out in the SFC’s circulars (including on institutional risk assessments and third party deposits and payments) have also been incorporated into the proposed changes.
The consultation is open until 18 December 2020.
A copy of the consultation paper can be found here.
 The proposed revised drafts of (i) the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Corporations) and (ii) the Prevention of Money Laundering and Terrorist Financing Guideline issued by the SFC for Associated Entities are included in the appendices to the consultation paper.