On 17 Jan 2025, the HKMA published its updated Supervisory Policy Manual, superseding all prior supervisory guidelines and circulars. The Manual categorizes guidance into statutory minimum standards (SG), non-statutory best practice recommendations (GN), and technical clarifications (TN), emphasizing that non-compliance with statutory guidelines may constitute a Banking Ordinance contravention while non-statutory guidelines serve as advisory benchmarks for risk management and business conduct.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction
On 17 Jan 2025, the Hong Kong Monetary Authority (HKMA) published its updated Supervisory Policy Manual, superseding all prior supervisory guidelines and circulars issued by the HKMA to address banking supervision standards under the Banking Ordinance.
Scope and Purpose
The Manual establishes the HKMA's supervisory policies and practices, setting minimum standards that Authorised Institutions (Als) and Authorised Money Brokers (AMBs) must attain to comply with the Banking Ordinance, while recommending best practices for risk management and business conduct. It explicitly states that the Manual does not cover all aspects of the Banking Ordinance, and Als/AMBs remain ultimately responsible for ensuring legal compliance through independent legal advice.
Guideline Classification and Compliance
The Manual categorizes guidance into three types: statutory guidelines (SG) setting minimum standards Als/AMBs 'should', 'are expected to', or 'must' follow; non-statutory guidance notes (GN) recommending best practices using 'should preferably' or 'are encouraged to'; and technical notes (TN) clarifying regulatory interpretations. Non-compliance with statutory guidelines may constitute a contravention of the Banking Ordinance, while failure to adhere to non-statutory guidelines may jeopardize an institution's authorization status.
Manual Structure and Implementation
Organized into modules under broad sections (e.g., Credit Management), each module specifies superseded guidelines, application scope, purpose, and structure. The HKMA monitors compliance with all guidelines as part of routine supervision, with statutory guidelines carrying enforceable weight under the Banking Ordinance. Each module includes an identification code, version number, and effective date to ensure users access the latest version.
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