Our Ref: B1/15C
16 January 2009
The Chief Executive
All Retailed Banks
Dear Sir/Madam,
As the Chinese New Year approaches, there will be a significant increase in the circulation and use of banknotes. Banks should heighten their vigilance in handling the circulation of banknotes. This letter sets out the control requirements for handling the circulation of banknotes which the HKMA had previously communicated to banks.
Banks should put in place a robust mechanism to ensure that all banknotes loaded into their automatic teller machines (ATMs) are authentic. In principle, banks should replenish their ATMs only from the following sources:
Similarly, banks should ensure that appropriate control measures are in place at branch counters to validate banknotes. For example, reliable validation machines (for higher denominations) and staff who are sufficiently experienced and trained2 on validation of banknotes should be available at bank offices.
Banks are expected to observe the above-mentioned requirements on an ongoing basis. If you have any questions on the content of this letter, please contact your usual supervisory contact at the HKMA.
Yours faithfully,
Nelson Man
Executive Director
(Banking Supervision)
1 AIs should conduct adequate and regular tests of the machines to ensure that the machines are able to detect new version of forged banknotes emerged from time to time.
2 AI management should ensure that adequate and regular training sessions are arranged for all the relevant staff especially if new counterfeit features of banknotes are identified.