SFC AML fining guidelines

On 29 June 2012, Hong Kong's Securities and Futures Commission (SFC) published its Disciplinary Fining Guidelines under the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (AMLO) to indicate how it will exercise its power to impose fines under this new AML legislation.

The guidelines came into effect on 1 July 2012 and are largely consistent with the previous guidelines published in 2003. The SFC has restated its policy of publishing all fining decisions.

Key points under “General considerations” are:

• intentional / reckless conduct is more serious than negligent conduct
• conduct that hurts Hong Kong's reputation (note this is not in the 2003 guidelines), damages the integrity of the securities and futures market or that facilitates or increases the risk of money laundering or terrorist financing, is taken seriously
• typically, “technical” breaches are considered less serious

In terms of the “Specific considerations”, the SFC will consider whether the firm:

• sought prior advice from its advisors
• brought the conduct to the SFC's attention quickly
• cooperated closely with the SFC
• took remedial steps after the conduct was identified
• took disciplinary action against those involved
• has a previous disciplinary record

The SFC will also consider whether the conduct was “one-off”; was wide-spread in the industry; or reveals serious or systemic weaknesses particularly in respect of the firm's customer due diligence and record-keeping procedures.