On 12 October 2018, the SFC issued the Consultation Conclusions on Proposed Amendments to the (1) Guideline on Anti-Money Laundering and Counter-Terrorist Financing (Current Guideline) and (2) Prevention of Money Laundering and Terrorist Financing Guideline Issued by the Securities and Futures Commission for Associated Entities (Guideline for AEs).
To address concerns over the revised guidelines coming into effect on 1 November 2018, allowing little lead time for implementation, the SFC has indicated that it will take a pragmatic approach and take into account a licensed corporation’s implementation plan.
The name of the Current Guideline will be changed to Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Corporations) (New Guideline) to make it clear that it is applicable only to SFC-licensed corporations. The guideline for authorized institutions, which is issued by the Hong Kong Monetary Authority, will be renamed as the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Authorized Institutions).
A tracked-changes version, showing differences between the Current Guideline and the New Guideline, is available at Appendix 2A of the Conclusions. Clean copies of the New Guideline and revised Guideline for AEs were gazetted on 19 October 2018.
The SFC has made various changes or clarifications to what was originally proposed in the July Consultation Paper. The final key changes relating to customer due diligence (CDD) include:
The SFC has also indicated that it will keep in view the need to provide additional guidance on the money-laundering / terrorist financing risk assessment of new technologies taking into account any relevant future guidance issued by the Financial Action Task Force (FATF), such as the result of the public consultation on Draft Risk-Based Approach Guidance for the Securities Sector on 6 July 2018, as well as future technological developments.
It is advisable to review your firm’s existing AML framework in order to:
We have prepared an overview of key changes to the SFC’s CDD requirements to assist clients with implementation. Please inform your usual contact at Deacons if you would like a copy.