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A cluster of enforcement actions by the Hong Kong Monetary Authority (HKMA) underlines the tough approach the jurisdiction is taking to combating financial crime.
The regulator has fined three banks for anti-money laundering and counter-terrorism financing (AML/CTF) failures in breach of the (AMLO), it said on Tuesday (July 22).
It fined Indian Overseas Bank, Hong Kong Branch (IOB) HK$8.5m (US$1.1m), ordering it to review past transactions and implement a remedial action plan.
IOB failed to ensure that its senior management had a clear leadership role and responsibility over AML/CTF, and did not examine complex or unusually large transactions, the watchdog said.
The regulator also fined Bank of Communications Limited Hong Kong Branch HK$3.7m (US$471,000) and a branch of its parent bank, Bank of Communications (Hong Kong) Limited, HK$4m (US$509,000) for AMLO breaches.
The banks lacked procedures to ensure all transactions were monitored when their banking systems changed, and failed to monitor business relationships continuously, the regulator found.
In addition, the HKMA fined 33 Financial Services Limited (33 Financial) HK$1.6m (US$203,000) for customer due-diligence failures in breach of the .
The regulator found that 33 Financial failed to gather sufficient information on the purpose and intended nature of the business relationships with customers, conduct customer due diligence measures or ensure that its business partners properly verified customers' identities.
The enforcement actions follow investigations by the watchdog into the banks鈥 systems and controls, which revealed deficiencies in procedures for monitoring business relationships with customers.
There were 鈥渟ignificant deficiencies鈥 in IOBHK鈥檚 transaction monitoring mechanism and in its management oversight of the bank鈥檚 AML/CTF controls, the regulator said.
The failure to load certain transactions into the transaction monitoring system shared between Bank of Communications (Hong Kong) and Bank of Communications Limited Hong Kong Branch undermined its effectiveness in identifying potentially suspicious activity.
Sending a message
The gravity of the investigation鈥檚 findings and the need to send a clear deterrent message merited the steep penalties, the regulator said.
鈥淓ffective transaction monitoring enables timely identification and reporting of suspicious transactions and thus is an essential component of banks鈥 AML/CTF controls,鈥 said Raymond Chan, executive director (enforcement and AML) of the HKMA.
鈥淏ank management should ensure that proper transaction monitoring systems and processes are in place and any identified deficiencies are addressed promptly.鈥
Carrot-and-stick approach
Hong Kong has taken a carrot-and-stick approach to combating financial crime, including the imposition of appropriate punishments for regulatory failings and encouraging intelligence sharing among banks.
As covered by 91天堂原創, in April 2025, Hong Kong enabled financial institutions to share intelligence in a bid to prevent fraud and money laundering.
The Hong Kong government added the Banking (Amendment) Bill 2025 to its legal gazette, proposing a new framework for authorised institutions (AIs) to share intelligence on suspected financial crimes.
In September 2024, the HKMA imposed a six-figure fine on WeChat Pay after the firm self-reported repeatedly failing to act on potential scams, despite alerts from law enforcement agencies.
As the use of cash decreases across the world and digital payment use increases, regulators are finding themselves playing catch-up with tech-savvy financial criminals.
The latest enforcement actions demonstrate that Hong Kong regulators are willing to use deterrence to ensure financial institutions play their part in hindering bad actors.
