Hong Kong Probes Firms for Money Laundering, SCMP Says

Jun 17, 2014 7:14 am ET

June 17 (Bloomberg) -- Hong Kong’s banking regulator is investigating several financial institutions including at least one bank for possible breaches of the city’s anti-money laundering regulation, the South China Morning Post reported.

One bank has been questioned about its money laundering controls, the newspaper reported, citing an unidentified person.

The Hong Kong Monetary Authority isn’t conducting investigations into money laundering, which is under the ambit of law enforcement agencies, it said in an e-mail response to questions from Bloomberg News. The checks on financial institutions, which follows on the implementation of an anti- money laundering law in 2012, are to identify possible breaches concerning customer due diligence and record keeping, it said.

“This is an important distinction,” the regulator said.

Regulators from Hong Kong to the U.S. are stepping up efforts to catch risk-management failures at banks. The U.S. Office of the Comptroller of the Currency in January proposed a policy shift that will remove hurdles to targeting lenders with certain enforcement actions.

The HKMA said last year it would double its team of specialists, which mainly comprises examiners for carrying out on-site checks at banks, to 22 people.

Banks should strengthen their anti-money laundering controls and failure to address the problem could threaten Hong Kong’s status as an international financial center, HKMA Chief Executive Norman Chan wrote in a letter to banks in April 2013.

U.S. regulators fined London-based HSBC Holdings Plc $500 million in 2012 for money-laundering faults and has penalized JPMorgan twice -- reaching a $300 million settlement over the London Whale trading losses and a $350 million agreement resolving allegations that the bank failed to report suspicions about Bernard Madoff’s Ponzi scheme.

--With assistance from Fion Li in Hong Kong.