Measures to combat money laundering are found wanting

PUBLISHED : Friday, 06 June, 2003, 12:00am
UPDATED : Friday, 06 June, 2003, 12:00am

Security officials are considering whether there is a need to tighten controls on remittance agencies after the International Monetary Fund found weaknesses in Hong Kong's measures to combat money laundering.

Police and customs officers would also raise from seven to 20 the number of staff on the Joint Financial Intelligence Unit, which investigates suspected money laundering, Commissioner for Narcotics Clarie Lo Ku Ka-lee told the security panel of the Legislative Council yesterday.

While the IMF's report commended Hong Kong's measures to combat money laundering and suspected terrorist financing, saying they largely met international standards, it said controls on remittance agents and money changers were insufficient.

Mrs Lo said Hong Kong tightened controls over remittance agents under a law passed in June 2000. The law requires them to register with police and keep records of clients who make transactions of more than $20,000 for six years. Since then, 783 remittance agents have been registered and 37 people have been prosecuted for failing to comply with the law.

Mrs Lo said the IMF recommended that more stringent monitoring measures, like those adopted by banks, be imposed on remittance agents. Bank officials above a certain rank are required to be 'fit and proper' persons, and all banks have to appoint a compliance officer to report suspicious transactions to financial intelligence unit.

The report also urged Hong Kong to take measures to resolve problems of customer identification in the case of shell companies, which the police said were commonly used to launder money.

Mrs Lo said her bureau agreed the problem should be looked at. She said a proposal to the international Financial Action Task Force on Money Laundering that professionals like lawyers and accountants be required to report suspicious clients might help overcome the problem. The taskforce will consider the proposal this month.