The Hong Kong Monetary Authority (HKMA) announced today (22 July) that it had completed an investigation and disciplinary proceedings for 33 Financial Services Limited (33FS) under the Payment Systems and Stored Value Facilities Ordinance (Chapter 584 of the Laws of Hong Kong) (PSSVFO). The Monetary Authority (MA) has reprimanded and ordered 33FS to pay a pecuniary penalty of HK$1,600,000 for contravening section 8Q of the PSSVFO as it failed to fulfil the minimum criterion under section 6(2)(b) of Part 2 of Schedule 3 to the PSSVFO.
The disciplinary action (Note 1) follows an investigation by the HKMA which found that, during the period from 1 December 2019 to 31 August 2023, 33FS failed to have in place adequate and appropriate systems of control to comply with the relevant paragraphs of the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Stored Value Facility (SVF) Licensees) (Guideline) (Note 2).
Specifically, the contravention relates to deficiencies in 33FS’ systems of control in three areas, namely:
| (a) |
obtaining sufficient information on the purpose and intended nature of the business relationships with customers; |
| (b) |
carrying out customer due diligence (CDD) measures on the business entities of which the individual customers acted on behalf; and |
| (c) |
ensuring the identification and verification of identity of customers was properly performed and documented by its business partners, which were acting as outsourced entities for 33FS, in accordance with its internal requirement. |
In deciding the disciplinary action, the MA has taken into account the relevant circumstances and factors, including:
| (a) |
the seriousness of the investigation findings as well as the fact that 33FS has previous disciplinary record in respect of the PSSVFO; |
| (b) |
the need to send a clear deterrent message to the industry about the importance of effective controls and procedures to address money laundering (ML) and terrorist financing (TF) risks; |
| (c) |
33FS has taken remedial measures to address the deficiencies identified by the HKMA and enhance its systems of control; and |
| (d) |
33FS is cooperative in resolving concerns identified by the HKMA. |
Mr Raymond Chan, Executive Director (Enforcement and AML) of the HKMA, said, “CDD measures are crucial for combatting ML and TF risks. Verifying the identity of customers and understanding the purpose and intended nature of the business relationships are essential elements of CDD measures. SVF licensees should ensure that they have effective CDD measures in place.”
Relevant link: Statement of Disciplinary Action
End
Notes:
- The disciplinary action is taken under section 33Q of the PSSVFO.
- Paragraphs 4.6.1, 4.1.3(a), 4.1.3(d), 4.4.4, and 4.3.16 of the Guideline (October 2018 version and September 2020 version).
