HKMA fines 33 Financial Services due to AML abuses

abdelaziz Fathi

Hong Kong’s banking regulator has fined 33 Financial Services Limited (33FS) HK$875,000 ($113,000) for breaches of anti-money laundering rules.

The disciplinary came after the monetary authority (HKMA) concluded its investigation under the Payment Systems and Stored Value Facilities Ordinance (PSSVFO). The probe showed that 33FS had failed to carry out appropriate checks relating to anti-money laundering and counter-terrorist financing measures.

The identified deficiencies occurred between November 2016 and June 2019 and showed that the company lacked the minimum criterion of customer due diligence. A series of on-site examinations carried out by the HKMA also found that 33FS failed to have in place adequate systems of control to comply with the relevant laws.

The lapses in 33FS’ systems related to ”continuously monitoring business relationships in respect of transaction monitoring; and implementing an effective name screening mechanism,” the Hong Kong Monetary Authority said in a statement.

FX and CFD brokers must go multi asset: Join free webinar from TraderEvolution to learn how

Hong Kong stepping up compliance efforts

In deciding the disciplinary action, the authority considered it needed to send a clear deterrent message about the importance of effective internal anti-money laundering controls.

Carmen Chu, executive director of enforcement and AML at HKMA, said, “While the majority of the SVF sector is characterised by lower ML/TF risks in view of the business nature, higher risk situations may emerge as business scale and scope develop, such as prepaid cards being misused for cash withdrawals funded by third-party’s (non-cardholders’) deposits. All SVF licensees are expected to make reference to the lessons learnt from this case as well as the guidance provided by the HKMA in the Guideline and circulars in their ongoing efforts to have in place effective AML/CFT systems of control for identifying, assessing and managing ML/TF risks, especially when encountering higher ML/TF risk situations.”

In reaching its decision, the HKMA said 33FS had been cooperative during its investigation, and there is no evidence that failures were deliberate.‎ Furthermore, the company had taken positive and extensive remediation work. It has also conducted a forward-looking review of its internal controls to ‎ensure compliance with the relevant regulatory requirements.

Hong Kong financial institutions have been stepping up their compliance to follow anti-money laundering rules. In November, the HKMA reprimanded four banks, including local units of Industrial and Commercial Bank of China and UBS, and fined them a combined HK$44.2 million for AML lapses.

Read this next

Digital Assets

AAX ranked world’s second largest spot exchange, only behind Binance

Crypto trading volumes experienced their first surge in activity since March as the majority of digital assets began their recovery from the recent grim price action, according to a new report by Cryptocompare.

Digital Assets

Bitpay teams up with Cardlytics to provide 15% cashback rewards

Crypto payment service provider Bitpay announced a partnership with Cardlytics Inc (NASDAQ:CDLX), which it says will offer more rewards for BitPay cardholders on its platform.

Digital Assets

BlackRock digs further into crypto with spot bitcoin private trust

BlackRock, the world’s largest asset manager with almost $8 trillion in AUM, has launched a spot bitcoin private trust for institutional clients in the United States.

Digital Assets

SEC fines Bloom Protocol, orders refund to BLT token purchasers

Blockchain startup Bloom, which raised $30 million in funds via an initial coin offering (ICO), has agreed to return the money to token purchasers and pay a $300,000 fine, the SEC announced.

Institutional FX

FX volume takes step back at Singapore Exchange in July

The Singapore Exchange (SGX), the country’s paramount exchange operator, has released its monthly volumes across its FX, derivatives and commodities segments for July 2022.

Market News

The Week Ahead: 12 August from David Madden, Market Analyst at Equiti Group

There was a spike in volatility last week when the US CPI report ticked down to 8.5% from 9.1%, missing the forecast of 8.7%. The announcement led to chatter the Fed might not carry out a 0.75% interest rate hike in September.

Digital Assets

Pomelo Pay adds crypto payments capabilities from TripleA

According to a June survey conducted by Deloitte, nearly 75% of retailers plan to accept either cryptocurrency or stablecoin payments within the next two years.

Executive Moves

Talos appoints “boss, mentor, and friend” Neal Pawar as strategic advisor

“Foundational technologies are needed for institutions to fully embrace this potential, however, and in my opinion Talos’s platform is steadily becoming the de facto industry standard for digital asset trading.”

Technology

Avelacom enhances Middle East connectivity amid new market trends

Avelacom found that smaller markets in the region were not sufficiently covered by third-party vendors.

<