Ms Callister points out that ultimately monitoring AML/ CTF compliance risk is the responsibility of the board. 'To enable company leaders in AML compliance to discharge their duties effectively, it would be most desirable for them to be independent of all operational and business functions with a sufficient level of seniority and authority, access to all records of the company and above all reporting to the management. In most jurisdictions, this role may be executed by a Compliance Officer, or Money Laundering Reporting Officer. Compliance will at least reach its goal when the management of the company supports it. Only then the quality standards can be respected and guaranteed.’
What is next?
Now that the AMLO is in place, the next set of rules regarding AML/ CTF compliance is likely to target DNFBPs, Ms Callister believes. 'We are fully committed to do what we have to do and comply with international standards – but we take it even further, as we also attend to our group standards, which take into account what happens across the world. We haven’t seen a timeline on new regulations. We wish to be well prepared, so we are working with a global approach. We welcome increased regulation – it's good for Hong Kong to have a safe environment in which people can work.’
The question of who will be doing the regulating is also a question. In accordance with the AMLO, money service providers are under a licensing and regulatory regime with the Customs & Excise Department as the competent authority. In addition, the Joint Financial Intelligence Unit (JFIU), jointly run by staff of the Hong Kong Police Force and the Hong Kong Customs & Excise Department, manages the suspicious transaction reports (STRs) regime for Hong Kong and receives, analyses and stores STRs for appropriate investigative units.
One possible option would be to make the HKICS a self-regulating organisation (SRO) to monitor AML/ CTF compliance among its members. This would be a challenge, Ms Suen points out, since the HKICS is not a statutory body. 'As a professional institute we do however regulate our own members,’ she says. 'If members are in breach of our code of professional conduct, they will face disciplinary action by the Institute.’
The Hong Kong Institute of Certified Public Accountants (HKICPA) and The Law Society of Hong Kong have laws governing them. As for the HKICS, she would prefer a different route where – in the case of CSPs – a person at the senior management level should be a member of the HKICS and follow the Institute's lead in compliance and AML.
‘We think that CSPs are very important in the industry and the business world. Because they help business owners set up companies, they are the people on the frontline. We believe that our HKICS members have the appropriate guidelines and training in corporate governance, AML, ethics and conduct, and so we believe our members are the best people to safeguard and be in charge of this area. Therefore, if there is an HKICS member in the CSPs senior management, this would help Hong Kong maintain its status as a safe, premier business centre, and avoid potential money laundering,’ Ms Suen says.
Ms Callister believes that, as the current regulator for CSPs, the Customs & Excise Department is up to the task – particularly if the government continues to hire specialists from the private sector who are familiar with the practical side of AML/ CTF compliance.
‘We believe the Customs & Excise Department is well qualified to discharge its duties in its current regulatory role,’ she says. 'It would certainly mature over time, and provided that the professional people of the right calibre and experience have been engaged by it or by any other authority designated with the duty to oversee a particular profession, we should have confidence in such a regulator.’
The Monetary Authority of Singapore went out into the industry and got training there, notes Ms Callister. 'They effectively used the industry to help support and train people in their roles and those ties have been kept very close. This is where the HKICS plays an important role in helping the government understand what is happening in a fast- moving industry,’ she says.
‘The Hong Kong government is very good at consulting the industry, and the SFC and other organisations have given them insight into the practical skills of dealing with the industry.’
Gina Miller, Journalist, and Kieran Colvert, Editor CSj
The HKICS regularly holds seminars on AML/ CTF compliance. Readers can check the 'ECPD’ section of the HKICS website (www.hkics.org.hk).