Meet the speaker: Solutions to implementing the AML/CTF requirements

08/30/2022

What to expect from a webinar that covers the latest anti-money laundering and counter-terrorist financing obligations under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance and how to comply with them



Since 1 March 2018, accounting professionals have been subject to the statutory anti-money laundering and counter-terrorist financing (AML/CTF) obligations under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) (the AMLO), with the Guidelines of AML/CTF for Professional Accountants published by the Institute. Under AMLO, accountants are required to perform customer due diligence and record keeping when they prepare for or carry out certain kinds of transactions for their clients. Other legislations impose related legal obligations which have impacted our practices, e.g. to report suspicious transactions and apply targeted financial sanctions in relation to terrorists and the proliferation of weapons of mass destruction.

AML/CTF obligations and measures are broad. They cut across all three government branches (i.e. the executive, the legislative and the judiciary) and require international cooperation between countries and regions. One notable change in the new Financial Action Task Force (FATF) methodology for the fifth round of mutual evaluations is that immediate outcome (IO) 4 will cover the Designated Non-Financial Businesses and Professions (DNFBPs) only (previously the financial institutions and the DNFBPs were assessed in IO 3 together). It is expected that the Hong Kong government will pay more attention to the DNFBPs sectors (including the accounting sector) as they account for 1 out of 11 IOs.

Prevention is the first line of defense against money laundering, and terrorist and proliferation financing, which is also stressed by the FATF IO 4, where the DNFBPs should adequately apply AML/CTF preventive measures commensurate with their risks. A well-regulated private sector plays a vital role in preventing the proceeds of crime and funds in support of terrorism from entering the financial and other sectors. Businesses are expected to identify, assess and understand the risks to which they are exposed to and take measures commensurate to those risks to mitigate them effectively. More importantly, nurturing a healthy compliance culture and environment in the organization can be the catalyst to further enhancing the effectiveness of all other preventive measures. It is vital that accountants are aware that the regulatory coverage extends beyond the large banks and financial institutions, and reaches all relevant businesses.

There are important legal updates on the horizon for Hong Kong’s AML/CTF regime which relate to three key areas:

  • Licensing of virtual asset exchanges: the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022 (AMLO Amendment Bill) has been issued in a draft. The AMLO Amendment Bill proposes amendments to provide a framework for the licensing of companies that operate virtual asset exchanges in, or market to, Hong Kong. The Securities and Futures Commission will oversee the new regime which commences on 1 March 2023;
  • Dealers in precious metals and stones (DPMS) registration: a new registration regime for DPMS under the AMLO is to be introduced, overseen by the Commissioner of Customs and Excise. It will be a two-tier system that will apply with the level of regulation depending on whether the DPMS engages in cash transactions for HK$120,000 or more; and
  • Upgrading and modernization of AMLO standards: the AMLO Amendment Bill also makes a number of miscellaneous but important updates, including:

-  The definition of the politically exposed person (PEP) is to change such that enhanced due diligence will be required not only for PEPs from outside of Mainland China but also for PEPs from other parts of the Mainland outside of Hong Kong;

- Alignment of beneficial ownership definition of trusts to the concept of controlling person by clarifying that, where trust is concerned, a beneficial owner includes a trustee, beneficiary and class of beneficiaries;

  - Greater flexibility regarding customer due diligence in non-face-to-face situations; and

 - Increased sanctions for unlicensed money service operators.

About the webinar
The webinar, available in two sessions on 7 and 13 September, aims to refresh and update participants’ understanding of the latest AML/CTF requirements and how to comply with them. The workshops explore practical solutions to facilitate compliance with AML/CTF requirements. It is very important for member practices and members working in relevant sectors or carrying out relevant transactions, to understand their obligations, as non-compliance could result in disciplinary action, or even criminal sanctions.


The webinar will also cover the implications of the latest sanctions policies toward Russia. The upcoming updates to the AML landscape and what members should look out for in terms of new obligations will also be discussed. 


Albert Lo FCPA, Partner, Deloitte Asia Pacific, has broad professional experience in AML, national risk assessment and sanctions reviews for regulators, financial institutions, and other DNFBPs. Over the last 11 years, he has worked on various investigations and compliance reviews across various industries in several Asia-Pacific countries – in particular, AML compliance review, fraud investigation, procurement fraud investigation, fraud risk review, SOX review, and corporate intelligence at a Big Four firm.