The Hong Kong Monetary Authority (HKMA) has fined Shanghai Commercial Bank Ltd $5 million (US$640,967) and reprimanded it for breaching anti-money laundering and counter terrorist financing rules.
The former British colony has been beefing up its laws and it is only the third time that the HKMA, which is also the city’s central bank, has fined a bank under 2012 anti-money laundering rules. It fined the local branches of State Bank of India in 2015, and Coutts in 2017.
The Asian financial hub’s regulator has made combating money laundering and terrorist financing a priority for 2018 and said in a statement that there was a need “to send a clear deterrent message to the industry”.
The HKMA said that Shanghai Commercial Bank, which is not listed, had failed to establish and maintain effective procedures for continuously monitoring business relationships.
Shanghai Commercial Bank said it had “comprehensively enhanced its internal anti-money laundering/counter-terrorist financing mechanism”, and that this included expanding manpower and resources, and stepping up appropriate staff training.
“The incident has had no impact on the services that the Bank provides to its customers, and all the business operations continue to be conducted as usual,” it said in a statement.
The HKMA found the bank had not monitored its business relationship with 33 customers by examining the background and purposes of their transactions that were identified as complex, unusually large or of an unusual pattern.
Those transactions had also no apparent economic or lawful purpose, it said its investigation had found.
The regulator said it had ordered the bank to have an independent external examiner prepare and submit a report into whether its remedial measures are sufficient.
Later this year, the Financial Action Task Force (FATF), will be visiting Hong Kong to carry out an inspection.
FATF is an inter-governmental body which sets standards and promotes effective implementation measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.