At the start of the Year of the Ox, Hong Kong intends to strengthen its efforts to prevent mainland officials from using Hong Kong to hide illicit wealth. According to foreign media reports, Hong Kong is evaluating the need to strengthen compliance with anti-money laundering regulations by expanding the scrutiny of capital flows and transactions of mainland officials from the current targeting of overseas persons.
According to the report, the Financial Services and the Treasury Bureau has prepared a proposal document that suggests more stringent due diligence will be conducted on politically sensitive persons (PEPs) and their Family members and close associates outside Hong Kong, rather than the current “outside China” category. In short, even mainland officials are included. In fact, the mainland government itself has taken an increasingly tough stance against corruption among its cadres and corporate executives, and is now catering to national policy.
It is reported that the relevant industry consultation was concluded last month, if the implementation of measures, Hong Kong will be able to fully comply with the global anti-money laundering organization Financial Action Task Force (FATF) requirements. At the same Time, the Hong Kong government has proposed changes to the requirements of financial institutions and the consulting industry to introduce bank accounts and transaction checks for people with political ties in the mainland.
Alan Linning, a partner at Johnson Stokes & Master, was quoted as saying that the above amendments clearly indicate to banks, lawyers, and accounting firms in Hong Kong that due diligence on politically sensitive individuals, including mainland officials, will henceforth require banks and law firms to align themselves as high-risk clients.
In fact, some institutions estimate that most of the money laundered in Hong Kong each year comes from the proceeds of crime in the mainland or Macau, and that from 2002 to 2011, illicit outflows from the mainland reached US$1.08 trillion, with Hong Kong being the largest recipient.
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