Hong Kong Monetary Authority Fines CA Indosuez $448,000 for Anti-Money Laundering Failure, Outsourced Money Laundering Control Activities to Service Provider But Service Was Suspended Resulting in Closing Alerts on 17 Clients Accounts with Delays Lasting 453 Days
1st December 2023 | Hong Kong
The Hong Kong Monetary Authority (HKMA) has fined CA Indosuez $448,000 (HKD 3.5 million) for Anti-Money Laundering failure, outsourcing money laundering control activities to a service provider (before to 2017) but service was suspended resulting in closing alerts on 17 clients accounts with delays lasting 453 days. HKMA: “The disciplinary action (Note 2) follows an investigation by the HKMA on CAHK’s systems and controls for compliance with the AMLO. The control lapses identified in the investigation relate to CAHK’s failure to continuously monitor business relationships with some of its customers by conducting appropriate scrutiny of transactions carried out for them during the period between 11 February 2016 and 2 October 2016. CAHK also failed to maintain effective procedures for carrying out its duties under the AMLO in relation to continuous monitoring of business relationships with customers during this period … … Prior to November 2017, CAHK had outsourced its anti-money laundering (AML) control activities, including the reviewing and clearing of alerts generated from its post-transaction monitoring system, to a service provider. The review and clearance of the alerts by the service provider were, however, suspended during the Relevant Period. As a result, the alerts arising from the accounts of 17 customers were closed with delays of up to 453 days. CAHK failed to continuously monitor the business relationships with these 17 customers and contravened section 5(1)(b) of Schedule 2 to the AMLO.” See below for more info:
“ Hong Kong Monetary Authority Fines CA Indosuez $448,000 for Anti-Money Laundering Failure, Outsourced Money Laundering Control Activities to Service Provider But Service Was Suspended Resulting in Closing Alerts on 17 Clients Accounts with Delays Lasting 453 Days “
Carmen Chu, Executive Director (Enforcement and AML) of the HKMA: “Banks are expected to maintain effective system for anti-money laundering and financial crime risk management, including through continuous monitoring of customer relationships and transactions. While some banks’ control functions may have been outsourced to other parties, the ultimate accountability and the duty to comply with the AMLO remain with the banks concerned.”
Hong Kong Monetary Authority Fines CA Indosuez $448,000 for Anti-Money Laundering Failure
29th November 2023 – The Hong Kong Monetary Authority (HKMA) announced today (29 November) that it had completed an investigation and disciplinary proceedings for CA Indosuez (Switzerland) SA, Hong Kong Branch (CAHK) under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615 of the Laws of Hong Kong) (AMLO) (Note 1). The Monetary Authority (MA) has imposed a pecuniary penalty of HK$3,500,000 against CAHK for contraventions of the AMLO.
The disciplinary action (Note 2) follows an investigation by the HKMA on CAHK’s systems and controls for compliance with the AMLO. The control lapses identified in the investigation relate to CAHK’s failure to continuously monitor business relationships with some of its customers by conducting appropriate scrutiny of transactions carried out for them during the period between 11 February 2016 and 2 October 2016. CAHK also failed to maintain effective procedures for carrying out its duties under the AMLO in relation to continuous monitoring of business relationships with customers during this period.
- (a) the seriousness of the investigation findings;
- (b) the need to send a clear deterrent message to CAHK and the industry about the importance of effective controls and procedures to address money laundering and terrorist financing risks;
- (c) CAHK has taken remedial actions to address the deficiencies identified; and
- (d) CAHK has no previous disciplinary record in relation to the AMLO and cooperated with the HKMA during the investigation and enforcement proceedings.
Relevant link: Statement of Disciplinary Action
Notes:
- Prior to 1 March 2018, the short title of Chapter 615 of the Laws of Hong Kong was the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance.
- The disciplinary action is taken under section 21 of the AMLO. The AMLO imposes customer due diligence and record-keeping requirements on specified financial institutions, including Authorized Institutions, and designated non-financial businesses and professions. As regards Authorized Institutions, the MA is the relevant authority under the AMLO.
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