Supplementary on Anti-money Laundering Bulletin – Frequently Asked Questions on Suspicious Transaction Reporting
On May 2012, HKICPA released a new Frequently Asked Questions (“FAQ”) on Suspicious Transaction Reporting in regards to its previous, June 2006 Anti-money Laundering Bulletin – Requirements on Anti-money Laundering, Anti-terrorist Financing and Related Matters. This FAQ focuses on the obligations of suspicious transactions reporting in Hong Kong for combating money laundering/ terrorist financing. It provides the basic definitions and background information for money laundering and other related activities.
The followings are some extracts from the FAQ:
What are Money Laundering and Terrorist Financing?
Money laundering includes a wide range of activities and processes involving the proceeds of crime. The sources of these proceeds are often altered in order to disguises their illegal origins. The relevant laws in Hong Kong make it an offence to deal with properties that one knows knowingly or have reasonable grounds to believe are funded by drug trafficking or any other indictable offences. These “Proceeds” are not limited to only cash and cash equivalents.
Terrorist financing includes the financing of terrorist acts, terrorists and terrorist organizations. It is an offense to make any funds or provide financial services or benefits to a person if one knowingly or have reasonable grounds to believe that the person is a terrorist or terrorist associate. Also it is illegal to provide or collect funds, if one were to know or believe that the funds will be used in terrorist acts.
What is the legal obligation or responsibility in respect of reporting money laundering and terrorist financing?
It is a statutory obligation for a person who knows or suspects that a property is funded or used in connection with indictable offense or a terrorist property to file a Suspicious Transaction Report (“STR”) to either the Joint Financial Intelligence Unit (“JFIU”) or compliance officers designated for anti-money laundering in his/her company. It is unnecessary to identify the specific nature of the offense or even if the offense have been or will be committed. Once the disclosure is made to the JFIU or the compliance officer, the person is discharged of his/her responsibilities under the law. Failure to report could result in a maximum penalty of three months imprisonment and a fine of $50,000.
What are the procedures for reporting suspicious transaction?
Follow the guideline on the JFIU website or report the suspicion to an employer designated compliance officer.
What are the legal protections associated with suspicious transaction reporting?
A disclosure to JFIU will not be treated as a breach of contract, any enactment, rule of conduct or other provision restricting disclosures of information and will not render the person making the disclosure liable in damages for any loss arising out of the disclosure. Also the identity of the person filing an STR is strictly confidential and by making an STR a person can be subsequently protected from being prosecuted for the offense of dealing with property that is the proceeds of indictable offence under section 25 of the below Ordinances:
- Drug Trafficking (Recovery of Proceeds) Ordinance (Cap. 405)
- Organised and Serious Crimes Ordinance (Cap. 455)
Finally it is illegal for a person knowing or suspecting that a disclosure has been made to the JFIU or a compliance officer to disclose to others any matters that is likely to prejudice an investigation which might be conducted as the result of the STR.
The FAQ does not constitute legal advice. For the detailed information of the Anti-money Laundering bulletin,
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