Anti-Money Laundering & Terrorist Financing New Requirements for Hong Kong law firms 04 July 2008 Effective from 1 July 2008, Deacons, and all other law firms and solicitors operating in Hong Kong, will be subject to new mandatory requirements in relation to client identification and verification, client due diligence and record keeping which will apply to all clients (both new and existing). With the objective of supporting international initiatives to combat money laundering and anti-terrorist activities, the Law Society of Hong Kong has introduced a mandatory guideline, in the form of "Practice Direction P" [click here for link to Hong Kong Law Society's brochures on the new Anti-Money Laundering Guideline ; and click here for link to Hong Kong Law Society's Practice Direction P], which requires law firms to have in place appropriate policies, procedures and internal controls for identifying and (where appropriate) reporting suspicious transactions. The procedures which Deacons has implemented to ensure compliance with Practice Direction P are similar to the AML procedures which banks and other financial institutions have already put in place to comply with relevant Hong Kong legislation and guidelines on money laundering and terrorist financing and therefore many clients will be familiar with these requirements already. What implications will these new requirements have for Deacons' clients? The most significant impact for clients is that, effective from 1 July 2008, when Deacons receives instructions, whether from a new client, or an existing client who provides instructions on a new matter, we will need to collect specific identity and client due diligence information. The type of information we will need to obtain will vary according to the type of client and the matter on which we are being instructed. By way of example, clients who are classified as "individuals" will be asked to provide an original (for sighting) or certified copy of their HK Identity Card or Passport and proof of address. Hong Kong's Privacy Commissioner has endorsed the requirement for the production of Hong Kong individuals' Hong Kong Identity Cards to solicitors under the Code of Practice on the Identity Card Number and other Personal Identifiers. Information to be collected from a client which is a company would include details of legal status of the entity and information about the directors, the company's shareholding structure and ultimate beneficial owners. There is a further requirement to identify and verify the persons within the company who are instructing us. We are also required to obtain certain information on transactions and our services and make further enquiries when we are instructed on certain matters: such as obtaining information on source of funding, relationship between parties etc. As the AML guidelines referred to above are mandatory for the legal profession in Hong Kong, we must seek this information from you and may not be able to act should we not receive the information.