Insurance Authority Reprimands & Fines Insurer for Contraventions of AML & CTF Ordinances

Insurance Authority Reprimands & Fines Insurer for Contraventions of AML & CTF Ordinances

Insurance Authority Reprimands & Fines Insurer for Contraventions of AML & CTF Ordinances 1400 788 Charing

On 26 January 2022, the Insurance Authority (“IA”) has reprimanded and fined MetLife Limited (now named FWD Life (Hong Kong) Limited) and Metropolitan Life Insurance Company of Hong Kong Limited (now named FWD Life Assurance Company (Hong Kong) Limited) (collectively, the “Companies”) a pecuniary penalty of HK$7 million for contravention of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (Chapter 615 of the Laws of Hong Kong) (“AMLO”)

The disciplinary action follows an investigation by the IA which found that the Companies had failed to adhere to the following provisions of the AMLO:-

  1. Failure to maintain effective procedure to determine whether their customers (or the beneficial owners of its customers) were politically exposed persons (“PEPs”) prior to entering business relationship and delay in screening process.
  2. Failure to obtain senior management approval before establishing business relationship with PEPs.
  3. Failure to take reasonable measures to establish source of funds and/or wealth of PEPs (even after PEPs failing to respond to the Companies’ queries).
  4. Failure to maintain effective procedure to assess whether certain business relationships may have a high risk of money laundering or terrorist financing.
  5. Failure to periodically review (at least annually) existing data relating to customers which presented a high risk of money laundering or terrorist financing to ensure such data are up to date.
  6. Failure to put in place adequate monitoring procedure with existing customers to identity complex and unusually large transactions which has no apparently economic purposes
  7. Failure to take all reasonable measure to ensure proper safeguards existed to mitigate money laundering and terrorist financing.

In coming to the above findings, the IA reviewed the Companies’ anti-money laundering manual and reviewed the actual execution of the measures stated therein.   The IA also found that there were a lack of communication within the Companies as to the responsibility and roles of the Compliance Officer and Money Laundering Reporting Officer and therefore concluded that there was an underlying weakness in the Companies’ anti-money laundering and counter-terrorist financing governance and culture of compliance during the relevant period.

It is clear that the IA takes these failures very seriously and is sending a clear message to the industry that all authorised insurers and intermediaries are expected to have in place effective anti-money laundering and counter-terrorist financing controls and procedure.  The IA will also conduct extensive review into the actual implementation and execution of such policies.

Contact us today if you require assistance with IA regulatory matters.

 

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