Hong Kong Monetary Authority Punishes China’s CITIC Bank for AML Violations

The Hong Kong Monetary Authority (HKMA) has imposed a fine of HK$4 million on China CITIC Bank International Limited (CITIC) for violating the Anti-Money Laundering and Terrorist Financing Ordinance (AMLO), the Hong Kong Monetary Authority reported. . This disciplinary action concludes a comprehensive investigation into CITIC’s compliance with AMLO.

Findings

The HKMA’s investigation found serious deficiencies in CITIC’s AMLO compliance systems and controls. In particular, the bank failed to implement effective detection rules and core model rules in its automated transaction monitoring system, resulting in a lack of system alerts for suspicious transactions from November 2015 to July 2018. Additionally, CITIC did not adequately investigate the background and purpose of the transaction. Document specific customer transactions or outcomes during this period.

disciplinary action

The HKMA’s decision to impose a monetary fine took into account a number of factors, including the seriousness of the findings and the need to send a deterrent message to the financial industry about the importance of strong controls on money laundering and terrorist financing risks. CITIC has since implemented corrective actions to address the identified issues and has no prior disciplinary record involving AMLO. The bank cooperated with the HKMA throughout the investigation and enforcement proceedings.

official commentary

Raymond Chan, HKMA’s Executive Director (Enforcement and AML), emphasized the critical importance of maintaining a strong transaction monitoring system to combat financial crime. “The integrity and robustness of transaction monitoring systems is critical to the ongoing fight against financial crime. It is important for banks to ensure that their transaction monitoring systems are properly configured and operating effectively,” he said.

Industry Impact

This disciplinary action serves as a reminder to financial institutions in Hong Kong of the stringent requirements under AMLO. The ordinance establishes customer due diligence and record-keeping obligations for certain financial institutions, including approved institutions and designated non-financial businesses and professions. The relevant authority, HKMA, continues to enforce these regulations to maintain the integrity of the financial system.

Image source: Shutterstock