15th August 2023 – (Hong Kong) The Hong Kong Monetary Authority (HKMA) has concluded its investigation and disciplinary proceedings against EFG Bank AG, Hong Kong Branch (EFGHK) for violations of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). As a result, EFGHK has been fined HK$16 million.
The disciplinary action comes after the HKMA conducted an on-site examination and further investigation into EFGHK’s compliance with the AMLO. The investigation revealed deficiencies in EFGHK’s control procedures related to customer due diligence (CDD) for customers transferred from another financial institution between 21st February, 2016, and 16th January, 2018. Additionally, shortcomings were identified in the on-boarding CDD and ongoing CDD measures for certain customers from 1st April, 2012, to 31st October, 2018. Furthermore, EFGHK failed to establish effective procedures for fulfilling its obligations under the AMLO regarding CDD and ongoing monitoring of customer relationships from 1st April, 2012, to 31st October, 2018.
In determining the disciplinary action, the HKMA considered various factors, including the severity of the investigation findings, the need to send a clear message about the significance of robust controls and procedures to combat money laundering and terrorist financing, the remedial actions taken by EFGHK to address the identified deficiencies, and the bank’s cooperation throughout the investigation and enforcement proceedings. It should be noted that EFGHK had no previous disciplinary record related to the AMLO.
Ms Carmen Chu, the Executive Director (Enforcement and AML) of the HKMA, emphasized the importance of customer due diligence and continuous monitoring in preventing financial crime and maintaining the integrity of the banking system. Authorized Institutions (AIs) are considered significant stakeholders in the fight against money laundering and terrorist financing and are expected to adhere to international standards incorporated in the AMLO, as well as relevant guidelines and circulars issued by the HKMA, in their business operations.