The guidance emphasises the use of data from internal and external sources, proactive data analysis and information sharing to tackle emerging AML risks.
The HKMA (Hong Kong Monetary Authority) has published new guidance for banks on integrating external source data into AML/CFT control systems to enhance effectiveness.
The guidance is the result of a thematic review carried out as part of the HKMA’s response to emerging risks from Covid-19 related fraud, mule account networks, identity theft and investment scams.
The thematic review examined banks’ end-to-end processes for handling and using information and data from various sources, including intelligence received from the FMLIT (Fraud and Money Laundering Intelligence Taskforce), a public private partnership established in Hong Kong in 2017.
The HKMA explored how this data contributed to banks’ input into the wider AML/CFT ecosystem, such as in suspicious transaction reports, the interception of funds suspected to be related to fraud, and the mitigation of risks in the banking sector.
The guidance includes good practices observed in some banks’ adoption of Regtech in their AML/CFT practices, some of which was shared in a January report.
The key observations and good practices include how AML/CFT systems should support the integration of external information and data, and findings from banks that have been successful in enhancing AML/CFT systems through the use of such information and data.
Examples are provided of how banks of differing sizes and complexity are using use external information and data to tackle emerging risks such as those associated with Covid-19 related fraud through proactive data analysis and information sharing.
Banks are expected to adopt the most appropriate arrangements, commensurate with their size, business scope and risks, to optimise the performance of their AML/CFT systems by making reference to the key observations and good practices shared from the thematic review, the HKMA says.
The guidance is available here.