10 September 2002
Since the 9/11 event a year ago there have been extensive calls
in the international community for financial institutions worldwide
to play a vigorous role in the fight against terrorist financing.
In this regard the Financial Action Task Force (FATF) issued
specific guidance on the detection of terrorist financing by
financial institutions in April this year. The HKMA has also from
time to time notified authorized institutions (AIs) of the lists of
terrorist suspects designated by various bodies to facilitate the
identification of suspicious accounts / transactions.
Action has been taken to implement in Hong Kong the various
United Nations resolutions against terrorism. These measures
include in particular the recent enactment of the United Nations
(Anti-Terrorism Measures) Ordinance, which makes financing of
terrorists a criminal offence and requires the reporting of
knowledge or suspicion of terrorist financing to the relevant
Notwithstanding these efforts, it should be recognized that Hong
Kong is an international financial centre handling a large volume
of financial transactions on a daily basis. AIs therefore need to
keep up with and consistently apply the highest standards in
identifying suspicious accounts / transactions.
Against this background, it seems an opportune time for
institutions to take stock of the efforts that they have made to
combat terrorist financing over the last year, and to report on the
results of this review to the HKMA. We are therefore asking all AIs
to prepare a summary report on such efforts. This should
specifically address the following key issues:
We are seeking as full a description as possible of the approach
that your institution has adopted in relation to these issues
rather than simply a yes/no answer. In some cases, institutions may
feel that, given the type of business they conduct and the type of
customers they have, the risk of involvement in terrorist financing
and money laundering in general is relatively low. Institutions are
free to reflect this in the replies they provide, but they should
note that a wide variety of institutions may be the conduit for
terrorist funds, and that terrorist financing may be difficult to
distinguish from seemingly conventional types of business
transaction. Institutions should not therefore automatically assume
that they are immune from risk.
We would be grateful if the chief executives of AIs would review
the report prior to submitting it to their institution's usual
contact in the Banking Supervision Department by 15 October 2002.
These contacts will also be available to answer any questions that
you may have on the contents of this letter.
D T R Carse
Deputy Chief Executive
1 AIs should have particular regard to the lists of
terrorist suspects gazetted by the Hong Kong Government and the
lists of names designated under the US Executive Order dated 23