Recently, the Hong Kong Monetary Authority (HKMA) fined Fubon Bank HK$4 million (approximately USD 510,000) for failures catering to anti-money laundering (AML) compliance. The probation by the HKMA covering the period from April 2019 to July 2022 disclosed that the bank did not maintain effective systems for monitoring customer transactions. Precisely, Fubon Bank failed to execute and implement adequate procedures for handling changes in transaction monitoring systems, missed follow-up on reduced transaction alerts, and did not conduct mandatory customer due diligence updates when certain “trigger events” occurred.
The violations stemmed from the bank’s inadequate systems and controls during the said period and were mainly due to the below-mentioned failures identified:
1. Ineffective Transaction Monitoring
The bank did not establish effective procedures for continuously monitoring customer transactions. This involved failures in updating transaction monitoring systems and inadequate scrutiny of flagged transactions.
2. System Management Issues
Fubon Bank failed to manage changes in its transaction monitoring systems properly. This resulted in a significant decrease in transaction alerts without proper follow-up, indicating a gap in detecting potential suspicious activities.
3. Lack of Due Diligence Updates
The bank did not update customer due diligence in response to specific “trigger events” that should have prompted reviews. This lack of action raised concerns about the bank’s capability to identify and mitigate risks of money laundering and terrorist financing activities.
These deficiencies illuminated the bank’s non-compliance with the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO), prompting the HKMA to levy the penalty to enforce stricter compliance and signal the importance of robust AML measures in financial institutions
The HKMA also emphasized the importance of robust compliance measures to detect potential money laundering activities. The penalty serves as a deterrent, reinforcing the need for banks to have effective oversight and procedures in place to maintain the integrity of the financial system in Hong Kong
