Hong Kong’s regulator fines Commerzbank AG $6 million for AML lapses

abdelaziz Fathi

Hong Kong’s banking regulator has fined the local unit of German banking giant  Commerzbank AG HK$6 million ( roughly $765,000) for breaches of anti-money laundering rules.

The disciplinary came after the monetary authority (HKMA) concluded its investigation into CBHK’s systems and controls for compliance with the AMLO. The probe showed that Commerzbank AG had failed to carry out appropriate checks relating to anti-money laundering and counter-terrorist financing measures.

The identified deficiencies occurred between April 2012 and June 2016 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 CBHK failed to have in place adequate systems of control to comply with the relevant laws.

The lapses in CBHK’s systems related to “conducting customer due diligence (CDD) before establishing business relationships. CBHK also failed to establish and maintain effective procedures for carrying out its duties under the AMLO in relation to conducting CDD and implementing name screening mechanism of customers’ beneficial owners during this period,” the Hong Kong Monetary Authority said in a statement.

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, “As the first line of defence, carrying out CDD measures upon customer on-boarding is fundamental to combating money laundering and terrorist financing and thereby maintaining the integrity of the banking system of Hong Kong. Banks should make reference to the HKMA’s relevant guidelines and circulars in reviewing and optimising the performance of their anti-money laundering and counter-financing of terrorism control systems on an on-going basis, to ensure that the design and implementation of their policies and procedures remain effective.”

In reaching its decision, the HKMA said Commerzbank 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.

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