On-site inspections: Quite a number of clients have been inspected by the SFC in Q4 or been contacted by the SFC for a visit in Q4 or Q1 of 2015. The figures below from the SFC’s website show that SFC inspections are on the increase.
|Quarter ended 30/6||Quarter ended 31/3||Quarter ended 31/12||Quarter ended 30/9|
|78 (in 2014)||64 (in 2014)||93 (in 2013)||67 (in 2013)|
|72 (in 2013)||49 (in 2013)||77 (in 2012)||73 (in 2012)|
|72 (in 2012)||36 (in 2012)||59 (in 2011)||87 (in 2011)|
Some clients were contacted by the SFC more than four weeks before the inspection while others only received two weeks' notice, so it remains important to anticipate the inspection and be prepared in advance.
Time to revisit AML / CFT systems: We mentioned in our July newsletter that the number of breaches regarding non-compliance with the AML guidelines noted during SFC routine on-site inspections increased by 577% during the SFC’s 2013/14 financial year (compared to 2012/13).
Licensed corporations are reminded to review, and update if need be, their existing AML / CFT infrastructure regularly and keep abreast of regulatory changes. For those asset managers who rely on third parties to do their CDD checks, they need to review and assess the third party's systems against the Hong Kong requirements on at least an annual basis. Such review and assessment should also be documented.
Staff are a corporation’s “first line of defence” against money laundering and terrorist financing activities so training should be provided on a regular basis.
During an AML / CFT seminar in October, the SFC continued to highlight the importance of senior management involvement in setting the AML / CFT culture and the “tone from the top” within corporations. The seminar materials are available from the SFC website.