The background to the Government's rather clumsy proposals to extend the statutory customer due diligence and record-keeping requirements of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (Cap. 615) to lawyers practising in Hong Kong is set out in previous Industry Insights (eg, "Government Consultation: A 'Solution' Looking for a Problem" and "Lawyers and DNFBPs").
The question why it is proposed to include solicitors and foreign lawyers practising in Hong Kong in a piece of legislation originally meant for financial institutions still remains to be convincingly answered; particularly, considering that in the last ten years lawyers practising in Hong Kong have had to comply with (among other things) the mandatory provisions of Practice Direction P ("AMLCTF") and its comprehensive set of guidelines.
Practice Direction P has stood the test of time and is accepted as being fit for purpose. It is also a benchmark for other professions in Hong Kong.
Readers who are lawyers practising in Hong Kong should acquaint themselves with the Amendment Bill and with the Law Society of Hong Kong's submissions.
Another question that looms large is why, if there has to be legislation, this is not dealt with by a simple enabling provision to the Legal Practitioners Ordinance (Cap. 159), providing that solicitors and foreign lawyers should conduct customer due diligence and keep records of relevant transactions? This way the integrity of Practice Direction P is maintained.
There is also a risk with the Government's legislative proposals that the profession's regulatory costs will escalate unreasonably and that client relationships will be adversely affected (as has unfortunately happened with some banks, thereby having a negative effect on Hong Kong's status as an international financial centre).
There is a phrase in English that should translate quite well in Chinese: "If it ain't broke, don't fix it".