Raymond Chan, Executive Director (Enforcement and AML), Hong Kong Monetary Authority
John (Cusack, Chair of the Global Coalition to Fight Financial Crime), Keith (Yip, Director of Crime and Security of the Hong Kong Police Force), ladies and gentlemen, good morning.
On behalf of the Hong Kong Monetary Authority (HKMA), I would like to offer you all a very warm welcome to the APAC Conference 2025 organised by the Global Coalition to Fight Financial Crime (GCFFC). I would also like to thank the GCFFC for holding this important event in Hong Kong and, more specifically, at our offices. I hope the surroundings will help lift you above your day-to-day jobs, and stimulate useful insight and debate about how to improve the fight against financial crime.
I am very pleased to have the opportunity to talk about our latest thinking around anti-money laundering (AML). I believe I have a rather unique perspective to share, having last been involved in this subject about 15 years ago, at a time when we were very focused on implementing technical standards. I returned about a year ago to find that the banking industry has swapped competition for collaboration, an essential mind-shift in my view, that is delivering much better protection for customers and which I hope will help to deliver the prospect of fully protected digital eco-systems.
I would like to start by responding to comments I have read in a number of recent global AML forums regarding the need to bring supervisory bodies to the table to address critical financial crime threats.
In fact, being at the table has always been a core part of the HKMA’s approach to combating financial crime. International standards and principles-based guidance, which support an intelligence-led approach have always formed the basis of our work to stimulate and support investment in the use of technology in AML.
Apart from supporting the use of technology, we are pivoting away from supervisory activities which prioritise compliance with technical requirements, towards those which incentivise change and focus on improving results, so that our collective system-wide response keeps pace with the rapidly changing threat landscape.
In my remarks I am going to use three interconnected themes to try to illustrate how we are doing this, which I hope will provide some food for thought across today’s discussions.
The first is how criminality has evolved on the back of innovations in the digital delivery of financial services. Rapid innovation has occurred in recent years and driven a fragmentation in financial services led by digital banks and fintechs, to which traditional banks have responded. The speed at which vulnerabilities in new sectors and service offerings are being exploited demonstrates the insatiable appetite for new avenues for financial crime; deepfake being the latest, but certainly not the last example.
The response to these challenges needs to draw on our collective experience to innovate as part of a broader system reset. There is nothing wrong with the standards or technical requirements underpinning the global AML network. The customer data collected by customer due diligence (CDD) and the transactional details maintained by financial institutions provide the fuel, and the supporting frameworks and capabilities act as the engine. Together they have enormous potential to deliver real impact. The ability of artificial intelligence (AI) to apply analytics to massive data sets can be a game-changer if applied correctly.
Let me tell you how the HKMA is ‘at the table’ on this and helping to incentivise change.
Since 2019, we have prioritised supporting the adoption of technologies which have demonstrated the ability to significantly increase the impact of the growing trend towards information and intelligence sharing. We have actively encouraged all retail banks to adopt network analytics and develop more bespoke thematic, intelligence-led capabilities driven by those systems, which has led to improvements in both outputs and outcomes.
By applying that capability to the identification of potential fraud victims through continuous monitoring of suspicious accounts, banks were able to safeguard over HK$900 million and identify and follow up over 5,200 potential victims in 2024.
The Police have shared more intelligence more quickly with the banks. Suspicious transaction reports based on intelligence passed via the Fraud and Money Laundering Intelligence Taskforce (FMLIT) quadrupled year on year in 2024 and criminal proceeds restrained or confiscated increased by 34% during the year.
And we are moving rapidly beyond this. In September last year, we wrote to the industry posing two important questions: Are the technologies which you have been using in anti-money laundering and counter-financing of terrorism (AML/CFT) fit for purpose? And how are you using or considering using AI to make sure your AML/CFT defence remains sufficiently robust now and in the future? We have just received feasibility studies and action plans from the banks and we will be working with them and an external consulting firm over the coming months as a core element of our ongoing supervision.
Because we are only as strong as our weakest link, it is important that all banks make progress with using AI. Some banks have already shifted away from transaction-focused, rules-based monitoring systems to more dynamic, customer behaviour-oriented models, which can provide faster, more effective ways to detect potential crime. What is perhaps missing at present is a coherent framework by which the entire industry can transition over time to these more effective detection models.
Nowhere is the evolution of criminality more apparent than in the area of fraud and related mule accounts – so that is my second theme. Because of the scale of the fraud threat there has been an unprecedented re-prioritisation of efforts across the eco-system. This has presented multiple opportunities to reset our response, enhancing collaboration and reducing duplication, bringing fraud, cyber and broader anti-financial crime capabilities together.
At the same time, because the acts of fraud and money laundering occur almost simultaneously, we have seen the introduction of real-time fraud monitoring to support earlier identification and interdiction of fraud-related fund flows. We intend to assist the industry to improve early detection using payment data analytics. We will shortly issue a tender seeking consultancy support to recommend, design and build a solution which will generate insights to combat fraud and other financial crimes by leveraging and analysing the payment data available in the banking system.
We will pursue this project in close collaboration with the Police and the banking sector. And we will reach out to other jurisdictions which have established similar systems to learn from their experiences and approaches. I am sure our AML colleagues in these jurisdictions will answer our calls for help positively.
My third theme is the need for an agile response.
Only a more interconnected eco-system will be able to deliver this: a network of banks with improved data streams, powered by more advanced capabilities, including analytics and AI as I have already covered. We are well aware that data quality is a critical dependency in this regard. Working closely with the Police and the banking industry, we will soon deploy wider access to data from Scameter – an app-based repository of suspicious account and other information compiled by the Police. Banks will be expected to integrate these data into their CDD and fraud monitoring processes.
The HKMA has been at the table in all the public-private platforms since the outset; we strongly believe that these platforms enable more effective and comprehensive intelligence development and can also lead to more consistent understanding of risk that helps to make CDD truly proportionate. We have tailored our supervisory approach to support the re-deployment of resources to these platforms and the development of capabilities needed to enhance results.
Looking at examples from 2024: FMLIT, a public-private partnership including all our major retail banks and six e-wallet operators, helped restrain or confiscate over HK$500 million in criminal proceeds during the year. The Anti-Deception Coordination Centre (ADCC) has facilitated closer collaboration between the Police and the 28 participating retail banks, resulting in the interception of HK$1.5 billion in suspected fraudulent payments.
Perhaps the most visible sign of our intention to adapt to the new era of collaboration is the changes we are making to the Banking Ordinance to facilitate bank-to-bank information sharing, which we will support through our ongoing AML supervision to enhance the detection and prevention of fraud.
The proposed amendments, published last Friday, are in line with similar initiatives overseas. They will provide a framework and legal protection for banks to share information, where there are indications that customers, accounts or transactions may be involved in crime. The aim is to close the information gap between banks, which criminals are currently able to exploit. In future, criminals shut out from one bank will find that they cannot just go next door and open an account with another bank, or activate one they have been keeping in reserve.
Of course, this has to be done while striking a balance between combating fraud and legitimate concerns over data privacy and customer confidentiality. This has been the subject of extensive consultation with stakeholders including the Privacy Commissioner for Personal Data. We also received responses to our public consultation early last year from many of the people here today, not least a very considered and positive contribution from the GCFFC. I believe we have John and Debra to thank for that.
The proposed legislation will be introduced into our legislature very soon and we are aiming to have the system functioning by the end of this year.
I would like to conclude my remarks today by underscoring the importance of continued collaboration in the fight against financial crime. The world today is very different from the one I knew when I was involved in AML work 15 years ago. The global AML community should continue to stick together, keeping geopolitics separate from our ambition to reset our response, lest we risk being overwhelmed by the growingly complex and intertwined financial crime landscape. Events like today are therefore important because it is only through working together, renewing our efforts on a daily basis, and with a great deal of ingenuity and innovation, that we can achieve the kind of reset that is needed to continue to stay ahead of the criminals.
Finally, may I extend my thanks to all those who are presenting today, including John and his team from the GCFFC who have put together an interesting program of presentations and panel discussions. I look forward to speaking to you over the course of the day. Thank you.
