Anti-Money Laundering and Counter-Terrorist Financing - A Practical Guide for Accountants, Estate Agents, Precious Metals and Precious Stones Dealers and Trust and Company Service Providers  

TV announcements on combating money laundering and terrorist financing  

 Accountants, Lawyers and Trust and Company Service Providers
 Estate Agents, Precious Metals Dealers and Precious Stones Dealers

The Narcotics Division has organised a series of Anti-Money Laundering Seminars for Designated Non-Financial Businesses and Professions (DNFBPs) in March 2010.

For details, please see the file attached.

Trust and Company Service Providers - Cantonese (2 March 2010 a.m.)

Estate Agents - Cantonese (2 March 2010 p.m.)

Lawyers (3 March 2010 p.m.)

Accountants - English (4 March 2010 a.m.)

Accountants - Cantonese (4 March 2010 p.m.)

Guideline for Precious Metals and Precious Stones Dealers

This Guideline aims to assist Precious Metals and Precious Stones Dealers to develop best practices and procedures to prevent them from being abused by money launderers and terrorist financiers. It is advisable for Precious Metals and Precious Stones Dealers in Hong Kong to adopt this Guideline.

Annexure 1
Annexure 2

An Advisory Guideline on Preventing the Misuse of Charities for Terrorist Financing

This Guideline aims to assist charities to develop best practices and procedures to prevent them from being misused for terrorist financing. It is advisable for charities in Hong Kong to adopt the suggestions set out in this Guideline.

Appendix 1
Appendix 2
Appendix 3

Hong Kong is committed to the fight against money laundering and terrorist financing. The establishment and operation of a comprehensive and effective regime to tackle the twin problems requires cross-functional co-ordination among government departments, private organisations and international bodies.

In the light of changes in the money laundering and terrorist financing situation at the international level and with a view to strengthening the strategy in tackling the twin problems, the Financial Services and the Treasury Bureau has taken over the overall co-ordinating role for anti-money laundering/counter-terrorist financing policies with effect from October 2008.

The Financial Services and Treasury Bureau, as the co-ordinator, will monitor Hong Kong's overall compliance with all the 40+9 Recommendations made by the Financial Action Task Force. The Narcotics Division, Security Bureau will assist in overseeing the implementation of those Recommendations that are related to the non-financial sectors and the non-profit organisations with a view to ensuring that the anti-money laundering/counter-terrorist financing measures taken by the relevant sectors and organisations are in step with the established international standards.

Legislation

Hong Kong has effective legal and financial systems in place to counter money laundering. The Drug Trafficking (Recovery of Proceeds) Ordinance (Cap.405) is the main weapon to trace, restrain and confiscate proceeds of drug trafficking and to stop drug traffickers from retaining and laundering their illicit profits. Together with the Organised and Serious Crimes Ordinance (Cap.455), a sound legal basis is provided for countering money laundering. The two ordinances were significantly strengthened in 1995 to make it more difficult for drug traffickers and other criminals to launder or retain their illicit profits.

In July 2002, the anti-money laundering provisions in the Drug Trafficking (Recovery of Proceeds) Ordinance and the Organized and Serious Crime Ordinance were further strengthened through the enactment of the Drug Trafficking and Organized Crimes (Amendment) Ordinance 2002. One major amendment effected through this ordinance is to allow for the making of restraint or charging orders in relation to the property of a person who has been arrested for a drug trafficking offence or a specified offence, and released on bail or refused bail. This helps forestall the defendant from disposing of, or concealing, his properties during the period when further investigation is in progress. Another amendment requires the holder of any realisable property, which is subject to a restraint or charging order, to provide documents or information on the value of the property to an authorised officer to facilitate the application and making of a confiscation order. A penal provision for breaching a restraint or charging order is also introduced to deter people from knowingly dealing with any restrained property. Another provision allows an assumption be applied to defendants who have been convicted of a drug money laundering offence. The Drug Trafficking (Recovery of Proceeds) Ordinance currently gives the court the power to assume all properties held by the defendant since conviction for a drug trafficking offence comes from drug trafficking. It then falls to the defendant to show the contrary. The amended ordinance also requires the court to fix a period within which a defendant is to pay the amount under a confiscation order.

On the anti-terrorism front, Hong Kong enacted legislation to give effect to the United Nations Security Council Resolutions (UNSCRs) concerning terrorism and terrorist financing. In June 2000, the United Nations Sanctions (Afghanistan) Regulation under the United Nations Sanctions Ordinance (Cap. 537) was enacted. The Regulation gives effect to UNSCR 1267 which aims to combat, among others, terrorist financing by preventing the making of funds and other financial resources available to the Taliban.

Following the 11 September 2001 terrorist attacks in the US, the international community called for global efforts to starve the funding of terrorists. Hong Kong has enacted further legislation giving effect to additional UNSCRs and the Special Recommendations of the Financial Action Task Force on Money Laundering (FATF) to combat terrorist financing. In October 2001, the United Nations Sanctions (Afghanistan) (Arms Embargo) Regulation came into operation. The Regulation implemented UNSCR 1333 which requires all States to freeze funds and other assets of Usama Bin Laden, his associates and entities associated with him. The regulation expired on 18 January 2002.

The United Nations (Anti-Terrorism Measures) Ordinance was enacted in July 2002 and a substantive part of it came into operation in August the same year. The ordinance fully implements the mandatory elements of UNSCR 1373 and the more pressing FATF Special Recommendations. The ordinance clearly prohibits any person within Hong Kong from providing or collecting funds for terrorists, and requires disclosure of suspected terrorist property.

The United Nations Sanctions (Afghanistan) (Amendment) Regulation came into operation in July 2002. The regulation implements UNSCR 1390 which extends part of the sanctions previously imposed by UNSCRs 1267 and 1333.

The United Nations (Anti-Terrorism Measures) (Amendment) Ordinance (the Amendment Ordinance) was passed in July 2004. It amended the United Nations (Anti-Terrorism Measures) Ordinance enacted in 2002, so as to give full effect to the UNSCR 1373 and the FATF Special Recommendations. It provides, amongst other things, the power to freeze the non-fund property of terrorists and terrorist organisations. Furthermore, it prohibits the provision or collection of funds by a person intending or knowing that the funds will be used in whole or in part to commit one or more terrorist acts. It also provides the legal framework within which Joint Financial Intelligence Unit can carry out exchange of financial information and intelligence with its overseas counterparts. The Amendment Ordinance also implements some of the requirements under the United Nations International Convention for the Suppression of Terrorist Bombings, the United Nations Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation and the United Nations Protocol for the Suppression of Unlawful Acts Against the Safety of Fixed Platforms Located on the Continental Shelf.

Law Enforcement

The Police Force and the Customs and Excise Department are responsible for enforcing the anti-money laundering legislation in Hong Kong. A Joint Financial Intelligence Unit (JFIU) jointly operated by the two agencies was set up in 1989 to receive, analyse and disseminate suspicious transactions reports. The JFIU maintains a central register of money changers and remittance agents. Both agencies work closely with the Department of Justice in investigation and prosecution.

Since the introduction of the Drug Trafficking (Recovery of Proceeds) Ordinance in 1989 and the Organized and Serious Crimes Ordinance in 1994, assets valued at HK$472 million have been confiscated and paid to the Government. As at June 30, 2008, assets amounting to HK$2.97 billion were restrained pending confiscation proceedings.

Regulatory Bodies

In addition to a comprehensive legislative framework, the banking, securities, insurance, futures and leveraged foreign exchange sectors have also put in place systems to counter money laundering. The Hong Kong Monetary Authority, the Office of the Commissioner for Insurance and the Securities and Futures Commission have all issued guidelines on money laundering to those industries under their respective supervision. These guidelines require the industries to observe stipulated standards and procedures in record keeping, customer identification and reporting of suspicious transactions. The guidelines are updated regularly to be in step with latest FATF recommendations and legislative changes.

Publicity and Education

Public education and publicity forms an integral part of an effective regime in combating money laundering and terrorist financing. Jointly with other stakeholder agencies, ND has organised annual seminars for relevant sectors since 2005. The latest series of seminars were held in June and July 2007. Over 2500 practitioners from the financial sectors, designated non-financial businesses and professions (DNFBPs) and charities attended the 15 sector-specific seminars. The seminars cover latest money laundering trends and typologies, suspicious transaction reporting, best practices and procedures to prevent the misuse of charity for terrorist financing, etc. They also discussed latest international developments on combating money laundering and terrorist financing and issues concerning the regulation of financial institutions and DNFBPs. ND will continue to organise outreaching activities to DNFBPs and Non-profit Organisations.

ND and the Joint Financial Intelligence Unit also jointly produced a self-learning interactive training kit for estate agents, precious stones dealers and precious metals dealers and other sectors. Consisting of a CR-ROM and a practical guide, the kit aims to equip the sectors with knowledge on offences of money laundering and terrorist financing, the need to fulfil the requirements of customer due diligence, record keeping and suspicious transaction reporting. It also includes lists of sector-specific suspicious activity indicators and case examples.

The Government also makes Announcements in the Public Interest (API) through the media promulgating criminality of money laundering and encouraging prevention and reporting of money laundering crimes. Leaflets and posters carrying these messages are produced for public distribution.

 TV Announcements in the Public Interest (APIs)

 Posters

Estate Agents, Precious Metals Dealers and Precious Stones Dealers. Be the Gatekeepers for Hong Kong	Accountants, Lawyers, Trust and Company Service Providers. Be the Gatekeepers for Hong Kong	Don't turn a blind eye to money laundering. Report suspicious transactions now!

 Leaflets

Estate Agents, Precious Metals Dealers and Precious Stones Dealers. Be the Gatekeepers for Hong Kong	Accountants, Lawyers, Trust and Company Service Providers. Be the Gatekeepers for Hong Kong	Don't turn a blind eye to money laundering. Report suspicious transactions now!

International Cooperation

The Basic Law provides for the continuation of Hong Kong's existing legal, administrative, financial and social systems as well as participation in international organisations beyond 1997.

Hong Kong has been an active member of the Financial Action Task Force on Money Laundering (FATF) , the international anti-money laundering standard setter, since 1990 and is a founding member of the Asia/Pacific Group on Money Laundering (APG) . Over the years, Hong Kong has put in place effective legal and financial systems to tackle money laundering, and has implemented most of the FATF's 1996 Forty Recommendations - the international standards and practices in combating money laundering designed for universal application - either by legislation or through guidelines issued by the financial regulators.

Hong Kong is intensely involved in all the important forums of the FATF, participating in the work of the Working Group on the Review of the Forty Recommendations, which culminated in the adoption of the revised set of recommendations by the task force at its Berlin Plenary in June 2003.

The revised set forms the new international benchmark against which jurisdictions worldwide are assessed on their efforts in the areas of Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT). Preparations are now in hand to implement the revised Forty Recommendations and Nine Special Recommendations in Hong Kong.

The FATF Forty Recommendations set out the basic framework for anti-money laundering efforts and are designed to be of universal application. Originally drawn up in 1990, they are subject to constant revision to reflect changing trends. The latest version was published in June 2003.

In response to the September 11 attacks in the US, the FATF expanded its remit to include the combating of terrorist financing and adopted the Eight Special Recommendations on Terrorist Financing in October 2001 as the benchmark to measure the efforts of the countries/territories in countering financing of terrorism. The Special Recommendation IX was issued in October 2003 to call on countries to stop cross-border movement of currency and monetary instruments related to money laundering and terrorist financing.