On 04 Jul 2024, the HKMA reported that a self-assessment of compliance with SPM TB-1 and the Trust Business Code by Authorized Institutions revealed satisfactory overall compliance with no full non-compliance, but 12 instances of partial compliance primarily concerning corporate governance controls. The HKMA confirmed three partial compliance instances were rectified by March 2024, with all remaining issues expected resolved by Q3 2024, and reiterated the requirement for institutions to maintain robust compliance systems and report material breaches promptly.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Assessment Overview
On 04 Jul 2024, the Hong Kong Monetary Authority (HKMA) issued a circular summarising the results of a self-assessment conducted by Authorized Institutions (AIs) and their locally incorporated AI subsidiaries (collectively 'reporting institutions') on compliance with the Supervisory Policy Manual Module TB-1 ('SPM TB-1') and the Code of Practice for Trust Business for the period 1 June 2023 to 31 December 2023. The self-assessment, carried out by internal audit, compliance, or equivalent departments, covered 84 provisions relating to trust business operations.
Compliance Findings
The overall compliance status was satisfactory, with no instances of full non-compliance reported. However, 12 aggregate instances of partial compliance were identified, predominantly related to Principle 4 of the Code ('Corporate governance and internal controls'), which mandates proper governance structures and risk management systems. The reported partial compliance issues pertained to oversight of delegates/service providers, adequacy of investment monitoring controls, risk and controls assessment, and complaint handling policies.
Rectification Status
As of the self-assessment submission date (31 March 2024), three instances of partial compliance had been rectified, with remedial actions for the remaining nine instances expected to be completed by Q3 2024. Reporting institutions are required to implement all remedial actions in accordance with their submitted plans.
HKMA Reminder
The HKMA reiterated that all AIs and AI subsidiaries conducting trust business in Hong Kong as trustees must maintain robust systems and controls to ensure ongoing compliance with SPM TB-1, particularly its general principles and practical standards. Institutions are reminded to promptly report material non-compliance to the HKMA and implement appropriate remedial actions, with the HKMA continuing to monitor compliance through its ongoing supervision.
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