HONG KONG MONETARY AUTHORITY Annual Report 1996

HONG KONG MONETARY AUTHORITY

While the HKMA would encourage authorised institutions to make use of a credit reference agency in making credit decisions and to contribute credit information, it would not be directly involved in setting up such an agency. Rather, it would attempt to promote the development of the concept in Hong Kong.

MONEY LAUNDERING

The level of awareness of the problem of money laundering in the banking sector continued to improve, as shown by the increase in the number of suspicious transactions reported to the Joint Financial Intelligence Unit (Table 4). The extension of the definition of the money laundering offence to cover the proceeds of indictable offences other than drug trafficking was a contributing factor to the increase in reporting, as was the introduction of a specific statutory obligation to report.

Table 4:
SUSPICIOUS TRANSACTIONS REPORTED TO THE JOINT FINANCIAL INTELLIGENCE UNIT

The HKMA has made it clear to authorised institutions that the checking of controls on money laundering is a regular agenda item in the banking supervision process. On-site examinations and prudential interviews on this subject were regularly conducted and reports of external auditors were commissioned to ensure compliance with the Guideline on Money Laundering.

CODE OF BANKING PRACTICE

In December 1995, the Banking Advisory Committee and the Deposit-Taking Companies Advisory Committee endorsed the proposal of the HKMA to develop with the banking sector a Code of Banking Practice (the Code) in Hong Kong. Subsequently, a working group comprising representatives of the HKMA and the banking industry was formed in January 1996 to develop the Code.

The introduction of such a Code will help promote good banking practices and a fair and transparent relationship between authorised institutions and their customers. This should enhance customer loyalty and confidence, thus contributing to the stability of the banking system.

The Code comprises five chapters. It covers, among other things, the relationship between banks and customers, opening and operation of accounts and loans, card services, payment services and debt collection. The Code is non-statutory and will be issued by the industry associations on a voluntary basis. Institutions will however be expected to observe the Code and the HKMA will monitor compliance as part of its regular supervision.

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