Banks learn about the difference in US and HK money-laundering rules
Monetary Authority says while it does not use the same tools as its US counterparts, it insists the standards in HK are just as rigorous
Standard Chartered is the latest global bank with extensive operations in Hong Kong to learn the hard way that financial regulators in the city and the United States take a very different approach to the enforcement of anti-money laundering efforts.
The New York Department of Financial Services last week fined Standard Chartered US$300 million after its New York branch failed to flag high-risk transactions from clients in Hong Kong and the United Arab Emirates.
In December 2012, HSBC Holdings agreed to pay US$1.92 billion in fines to settle charges related to money laundering and terrorist financing levelled by US authorities.
The Hong Kong Monetary Authority has never fined any banks for such breaches, although the court has imposed heavy penalties on individuals for money laundering. The steepest punishment was meted out to Luo Juncheng, who was jailed for 10½ years in January last year for laundering more than HK$13 billion involving online transactions between Hong Kong and the mainland over eight months.
The HKMA says that while it has different supervisory tools to that of its US peers, it insists the standards in Hong Kong are just as high. Both jurisdictions are members of the Financial Action Task Force (FATF), requiring banks under their watch to have measures in place to report or monitor their customers to prevent the bank networks being used for illegal transfers.
"Different jurisdictions face different money laundering and terrorist-financing threats, therefore in practice, different regulators have different measures tailor made to their local market operations," an HKMA spokeswoman said.