Hong Kong Monetary Authority Fines EFG Bank $2 Million for Anti-Money Laundering & Due Diligence Failure, Failed to Verify Identities of 147 Clients & Beneficial Owners, Failing to Verify 33 Beneficial Owners Classified as Higher Risk & Failed to Review Unusual Transactions
18th August 2023 | Hong Kong
The Hong Kong Monetary Authority (HKMA) has fined EFG Bank $2 million (HKD 16 million) for anti-money laundering & due diligence failure, failing to verify identities of 147 clients & beneficial owners, failing to verify 33 beneficial owners classified as higher risk & failing to review unusual transactions in the accounts. HKMA: “The disciplinary action follows an on-site examination and further investigation by the HKMA on EFGHK’s systems and controls for compliance with the AMLO. The investigation identified control deficiencies in respect of conducting customer due diligence (CDD) on customers transferred from another financial institution during the period from 21 February 2016 to 16 January 2018, as well as on-boarding CDD and on-going CDD measures on some other customers during the period from 1 April 2012 to 31 October 2018. In addition, during the period from 1 April 2012 to 31 October 2018, EFGHK failed to establish and maintain effective procedures for carrying out its duties under the AMLO in relation to CDD and on-going monitoring of business relationships with customers.” See below for HKMA statement
” Hong Kong Monetary Authority Fines EFG Bank $2 Million for Anti-Money Laundering & Due Diligence Failure, Failed to Verify Identities of 147 Clients & Beneficial Owners, Failing to Verify 33 Beneficial Owners Classified as Higher Risk & Failed to Review Unusual Transactions “
Carmen Chu, Executive Director (Enforcement and AML) of the HKMA: “CDD and continuous monitoring of business relationships with customers are crucial measures for Authorized Institutions (AIs) to protect accounts from being abused for financial crime and safeguard banking system integrity. AIs are key stakeholders in the anti-money laundering and counter-terrorist financing ecosystem and should uphold the international standards incorporated in the AMLO as well as the relevant guidelines and circulars issued by the HKMA in their conduct of business.”
Hong Kong Monetary Authority Fines EFG Bank $2 Million for Anti-Money Laundering & Due Diligence Failure
- The Monetary Authority takes disciplinary action against EFG Bank AG, Hong Kong Branch for contraventions of Anti-Money Laundering and Counter-Terrorist Financing Ordinance
15th August 2023 – The Hong Kong Monetary Authority (HKMA) announced today (15 August) that it had completed an investigation and disciplinary proceedings for EFG Bank AG, Hong Kong Branch (EFGHK) 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$16,000,000 against EFGHK for contraventions of the AMLO.
The disciplinary action (Note 2) follows an on-site examination and further investigation by the HKMA on EFGHK’s systems and controls for compliance with the AMLO. The investigation identified control deficiencies in respect of conducting customer due diligence (CDD) on customers transferred from another financial institution during the period from 21 February 2016 to 16 January 2018, as well as on-boarding CDD and on-going CDD measures on some other customers during the period from 1 April 2012 to 31 October 2018. In addition, during the period from 1 April 2012 to 31 October 2018, EFGHK failed to establish and maintain effective procedures for carrying out its duties under the AMLO in relation to CDD and on-going monitoring of business relationships with customers.
In deciding the disciplinary action, the MA has taken into account all relevant circumstances and factors, including the following:
- (a) the seriousness of the investigation findings;
- (b) the need to send a clear deterrent message to EFGHK and the industry about the importance of effective controls and procedures to address the risks of money laundering and terrorist financing;
- (c) EFGHK has taken remedial and enhancement measures to address the deficiencies identified by the HKMA; and
- (d) EFGHK has no previous disciplinary record in relation to the AMLO and cooperated with the HKMA during the investigation and enforcement proceedings.
Notes:
- 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.
- 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.
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