Transcript Anti-Money Laundering Seminars

International Standards on
Regulating DNFBPs &
The way forward
Narcotics Division, Security Bureau
Mr Peter KWOK
Assistant Secretary for Security
27 February 2009
Agenda
Financial Action Task Force (FATF)
requirements on Trust & Company Service
Providers (TCSPs)
Highlight of the FATF recommendations
relevant to TCSPs
Way Forward in regulating TCSPs
2
Designated Non-Financial Businesses
and Professions (DNFBPs)
DNFBPs as defined by Financial Action Task
Force (FATF) are:
 Lawyers
 Accountants
 TCSPs
 Real Estate Agents
 Dealers in Precious Metals/ Stones
 Casinos
3
FATF Requirements
FATF requirements on
Trust & Company Service
Providers (TCSPs)
4
FATF Requirements for TCSPs
Requirements to be specified in law:
• CDD (Rec. 5)
• Record Keeping (Rec. 10)
• Suspicious Transaction Reporting (Rec. 13)
Other requirements:
• Internal Controls (Rec. 15)
• Sanctions (Rec. 17)
5
FATF Requirements for TCSPs
Other requirements:
• Politically Exposed Persons (PEPs) (Rec. 6)
• New technology/ Non-face-to-face
Business (Rec. 8)
• Reliance on 3rd parties/ intermediaries (Rec.
9)
• Complex / unusual transactions (Rec. 11)
6
FATF Requirements for TCSPs
Other requirements:
• No tipping-off (Rec. 14)
• Special attention to parties from noncomplying jurisdictions (Rec. 21)
• Self Regulatory Organisation (SRO)(Rec. 24)
• Competent authorities to establish guidelines
(Rec. 25)
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FATF Requirements for TCSPs
When Trust and Company Service Providers
• Acting as a formation agent of legal person;
• Acting as a director or secretary of a company;
• Providing a registered office, etc for a company;
• Acting as a trustee of an express trust;
• Acting as a nominee shareholder for another person.
They have to comply with Rec 5, 6 & 8-11.
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Highlight
Highlight of
FATF recommendations
relevant to TCSPs
9
Rec. 5 and 9 (CDD)
• To identify the customer and verify his ID
• To identify the beneficial owner
• The purpose and intended nature of the
business relationship
• On-going CDD and enhanced CDD
• Reliance on 3rd parties/ intermediaries
10
Rec. 10 (Record Keeping)
• To retain all documents relating to
transactions
• At least 5 years after the completion
of transactions
11
Rec. 13 and 14 (STRs)
• Suspicious Transactions Reporting
(STR) requirements
• Protection from criminal/ civil liabilities
• No tipping-off
12
Rec. 15 (Internal Control)
• To establish/ maintain internal
policies/ procedures to prevent
ML/TF
• To ensure high standards in hiring
employees
• On-going staff training
• Audit function to test the system
13
Rec. 24 and 25 (SRO & Guidelines)
• Government authority or Selfregulatory Organisation (SRO) to
monitor and ensure compliance with
AML/CFT requirements
• Power to sanction in case of noncompliance
• Government authority or SRO to
establish guidelines
14
Rec. 17 (Sanctions)
• Sanctions are effective, proportionate
and dissuasive
• Sanctions can be meted out by
Government authority or SRO
15
Rec. 6 (PEPs)
• Have appropriate risk management
systems to determine whether clients
are Politically Exposed Persons (PEPs)
or not
• Senior management approval for
having business relationships
• To establish source of wealth/ fund
16
Rec. 8 (New Technology)
To take measures:
• To prevent misuse of technological
developments for ML
• To address risk associated with nonface-to-face business relationships
17
Rec. 11 (Complex Transactions)
• To pay special attention to all
complex, unusual large transactions
and unusual patterns of transactions
• To examine the background/ purpose
of such transactions
18
Rec. 21 (Special Attention)
• To give special attention to
dealings with parties from
countries which do not comply
with the FATF Recommendations
19
FATF Recommendations relevant
to DNFBPs
4
5 * 6
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2
3
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8
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10 * 11
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13 * 14
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Mutual Evaluation by FATF
• The Third round of Mutual Evaluation
(ME) is underway
• 23 jurisdictions have been assessed
• www.fatf-gafi.org
21
Way Forward
Way Forward
in regulating TCSPs
22
Way Forward (1)
• Establishment of Central Co-ordinating
Committee (CCC), chaired by Financial
Secretary, in April 2008
• To steer & co-ordinate the strategic
development of HK’s AML/CFT regime in
line with internationally recognised
standards
23
Way Forward (2)
• FSTB assumes the role of overall coordinator for AML/CFT matters and with
specific responsibilities on financial
sectors
• SB (Narcotics Division) is to look after
DNFBPs and Non-profit Organisations
24
Way Forward (3)
Legislation on CDD & Record Keeping
• Phase I : Financial Sectors
• Phase II: DNFBPs
• No time table and open-minded
25
Way Forward (4)
• To prepare for Phase II, SB will step up
outreaching activities to raise awareness
on AML/CFT and work closely with
regulatory/ professional bodies
• CPD Seminars
• Sector Specific Guidelines
• Revised Interactive Training Kit
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Thank you!
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