On 30 Dec 2024, the HKMA and HKAB published updated AML/CFT FAQs clarifying operational requirements under the existing AML/CFT Guideline, superseding the 2022 version. The document provides detailed guidance on trigger events for risk assessments, iAM Smart usage, beneficial ownership identification, PPTA definitions, and dual-use goods controls, while explicitly stating it does not introduce new regulatory requirements.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction and Document Scope
On 30 Dec 2024, the Hong Kong Monetary Authority (HKMA) and the Hong Kong Association of Banks (HKAB) jointly issued a revised set of Frequently Asked Questions (FAQs) on Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) requirements. The document clarifies operational guidance for Authorized Institutions (AIs) under the existing AML/CFT Guideline, superseding the October 2022 version, and explicitly states it does not constitute a regulatory change but serves as interpretive assistance.
Key Clarifications on Risk Assessment and Trigger Events
The FAQs specify that AIs must review institutional ML/TF risk assessments biennially or when material trigger events occur, including significant AML/CFT system breaches, new customer segments/delivery channels, new products/services, or major operational process changes (e.g., new technology adoption). The document emphasizes that risk-based approaches to AML/CFT Systems (e.g., simplified procedures for lower-risk segments) must align with the AI's institutional risk assessment.
Identity Verification and iAM Smart Guidance
The document confirms that iAM Smart (Hong Kong Government's digital ID system) is recognized for identity verification under the AML/CFT Guideline. AIs may use iAM Smart for remote onboarding without requiring additional photo-bearing documents, as biometric authentication mitigates impersonation risks. However, AIs must retain iAM Smart authentication results and verified HKID data for record-keeping, and cannot rely on intermediaries for ongoing transaction monitoring.
Beneficial Ownership, PPTAs, and Dual-Use Goods
Clarifications include: (1) Beneficial owners must be natural persons exercising ultimate control; (2) PPTAs (Persons Purporting to Act on Behalf of a Customer) require identification only if they conduct ML/TF-relevant activities; (3) For dual-use goods (items with commercial/military applications), AIs must implement risk-based controls including enhanced due diligence, transaction screening, and staff training, with guidance provided in Appendix 2.
Non-Regulatory Operational Guidance
The FAQs address non-regulatory operational matters, such as acceptable identity documents for Hong Kong/non-Hong Kong residents, retention of electronic documents, source of wealth requirements (limited to higher-risk scenarios), and NSL-related STR filing procedures. It explicitly states that expired identity documents do not require re-verification unless specified in trigger events, and that AIs may use self-certifications for certain customer information on a risk-sensitive basis.
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