Implementation of FATF Special Recommendation VII on Wire Transfers

The Hong Kong Monetary Authority (HKMA), after consultation with the Hong Kong Association of Banks and the DTC Association, announced today (Wednesday) revisions to the requirements in the HKMA Guideline on prevention of money laundering and terrorist financing relating to wire transfers. These revisions give effect to Special Recommendation VII (SR VII) issued by the Financial Action Task Force on Money Laundering (FATF)¹.

SR VII was developed with the objective of preventing terrorists and other criminals from having unfettered access to wire transfers for moving their funds, and detecting such misuse when it occurs. It aims to ensure that basic information on the originator of wire transfers is immediately available to law enforcement or prosecuting authorities, financial intelligence units, and receiving financial institutions for identifying, reporting and investigating suspicious transactions.

Hong Kong is strongly committed to combating money laundering and terrorist financing, and will therefore be implementing SR VII, as suggested by the FATF, with effect from 2 January 2007².

Under the revised Guideline, an ordering institution in a cross-border remittance transaction with a value of HK$8,000 or more³ (or the equivalent in foreign currencies) will be required to include in the remittance message the address of the originating customer, or, failing this, the customer's date of birth or the number of a government-issued identity document the customer holds (for example, an ID card or passport). This is in addition to the information already required, namely the customer's name and account number (if the customer has an account).

Financial institutions in other countries which adopt the FATF standards will be required under SR VII to adopt similar procedures to identify the originator of incoming remittances. Inclusion of the required originator information in remittance messages originating from Hong Kong is therefore necessary to help ensure that remittance transactions will be effected without problem or delay by the receiving financial institutions in those countries.

Authorized institutions will be expected to ensure that these revised requirements on remittance transactions are adequately communicated and explained to bank customers when they are implemented, and that they have the necessary customer consent. The HKMA and the two industry associations hoped that customers will be understanding of these revised requirements.

¹ The FATF is an inter-governmental body established in 1989 to develop and promote policies, both at national and international levels, to combat money laundering and terrorist financing. Hong Kong has been a member of the FATF since 1990 and fully subscribes to the FATF standards.

² It is recognised that some authorized institutions may need time to make the necessary adaptations to their systems and procedures, but the HKMA would expect these adaptations to be completed by end-June 2007 at the latest.

³ While it is not a requirement to include all the originator information in the case of remittances (both cross-border and domestic) of less than HK$8,000 or the additional originator information (i.e. address etc.) in the case of domestic remittances of HK$8,000 or more, institutions are nevertheless encouraged to do so where possible. If they do not include the relevant originator information in such cases, they should record and retain the information and be prepared to make it available within three business days upon request from either the beneficiary institution or appropriate authorities.

For further enquiries, please contact:
Ying-ying Cheng, Manager (Press), at 2878 1687 or
Thomas Chan, Senior Manager (Press), at 2878 1480

Hong Kong Monetary Authority
22 November 2006