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Banking & Finance

Hong Kong has to bank on better ATM security

With money-laundering gangs thwarted by facial recognition in Macau, they have simply turned their attention to banks in the city risking our reputation as a financial centre

PUBLISHED : Saturday, 03 February, 2018, 1:08am
UPDATED : Saturday, 03 February, 2018, 1:08am

A surge estimated at HK$20 billion a month in suspicious ATM withdrawals in Hong Kong is attributed to a crackdown on money laundering in Macau. Authorities in the gambling city drove out organised ATM withdrawal gangs by upgrading security. The operations have apparently stayed in business simply by moving into Hong Kong. The ease with which they did this without being troubled by the outdated security of Hong Kong banks rings alarm bells.

It does nothing for Hong Kong’s reputation as a financial centre. More up-to-date technology and tighter regulation are urgently needed steps towards addressing the problem. The mainland, for example, has begun to experiment with facial recognition technology.

HK$20 billion-a-month surge in suspicious ATM withdrawals hits Hong Kong banks after Macau rolls out facial recognition

It is the installation of facial recognition technology across Macau’s ATM network that prompted the city’s ATM gangs to switch to Hong Kong cash machines. At about the same time, Beijing set strict limits on overseas withdrawals by individuals and banned withdrawals by anyone but the cardholder.

Hong Kong, where the cardholder may authorise the use of multiple bank cards by someone else, who can easily provide proof, was an obvious replacement for Macau. It will continue to be so as long as the government and the Hong Kong Monetary Authority do not require the banks to follow the example of Macau.

Money laundering and the fuss over ATM withdrawals in Hong Kong

As a financial centre, the city cannot afford the damage to its brand by having its name crop up too often in reports on money laundering and tax dodging. Ironically, in this regard, one of the city’s strengths is a potential weakness.

Simple requirements for setting up a company, low tax and the rule of law make it an attractive place to establish a firm, and wrongdoers take advantage. The tax authorities collect less information than overseas counterparts and the perceived secrecy of banks and companies is attractive to those who wish to wash money.

The monetary authority admits Macau’s facial recognition technology may have had an impact on Hong Kong. It said it would liaise with police and banks should it become necessary to take appropriate measures. One reason for acting sooner rather than later is that ATM withdrawal gangs are easily identified as targets by local criminals, which has led to a couple of big robberies and raises the risk of street mob violence.

Another reason is that as a member of both the global Financial Action Task Force and the Asia/Pacific Group on Money Laundering, Hong Kong faces evaluation by both in 2018-19. The task force conducts peer reviews of each member to assess compliance with and the effectiveness of its recommendations. It would not look good for Hong Kong to be shown in an unfavourable light by a gambling centre.