An HKMA investigation found that JPMorgan Hong Kong failed to establish and maintain effective controls for handling wire transfers, conducting CDD and monitoring business relationships.
The asset management firm was both the buyer and seller in a transaction between two of its brokers, which the SFC deemed was a wash trade.
First phase of bank culture self-assessments will cover about 30 institutions, including all major retail banks and selected foreign bank branches.
The SFC has reviewed brokers' internal control systems and found they are not adequately protecting client assets, supervising their staff or incentivising good compliance culture.
Chinese regulators have applied a one year income tax exemption for mainland investors buying and selling Hong Kong funds through the mutual recognition of funds scheme.
The HKMA advises banks to start considering the system changes necessary to implement the Basel Committee's latest Pillar 3 disclosure requirements.
Authorised institutions should be ready to measure and report IRRBB exposures using the new standardised framework by 1 July 2019.
Fintech and cybersecurity were viewed as the areas with the largest skills shortage, followed by a skills gap in regulatory and compliance knowledge.
Launched on 26 September for northbound trading, the investor identification regime will be introduced for southbound trading by the end of Q1 2019.
Trading and settlement issues will require "a very long period of discussion" to resolve, according to SFC chairman Tim Lui, adding that the focus will shift to enabling ETF cross listings.