REGULATING COMPANY SECRETARIES
Transcript of REGULATING COMPANY SECRETARIES
HKICS Members –
Compliance with Hong Kong’s Regulation
of Corporate Services Providers (CSPs)
19 September 2016
Mr Paul DS Moyes CPA FCIS FCS(PE)
Council Member and Chairman of the Professional
Services Panel, HKICS
Executive Director, Tricor Services Limited
All Rights Reserved. Not intended as legal advice and for reference only
HKICS Members
University Graduates
8 International Qualifying Papers +
Three years working
experiences + Fit and Proper Requirements
Qualified under Listing Rules to be Company
Secretaries of Listed
Companies, a Senior
Management Position
Authorized under Anti-Money Laundering
Ordinance to carry out due diligence for
banks
Governance Professionals including in
AML/CFT areas to help Hong
Kong comply with its international
obligations
The Problem Area for HK - Financial Action Task Force (FATF)
Recommendation 22 – DNFBP Sector – HKICS Member – Please Help!
In summary, as peer-sharing, HKICS members should,
where they are employed in CSPs ensure that there
are:
Sanctions Compliance
• Please remember sanctions compliance as part of CDD and ongoing
compliance. See SFC and OFAC websites
• These apply to dealings with North Korea, Sudan, etc.
While HKICS Members Tries to Help On
AML/CFT Issues – Clients Vote With Feet As
They Cannot Open Bank Accounts
HKICS - 8 September 2016Bank Account Opening Survey Report
• 98% of the respondents thought that companies were having
difficulties opening bank accounts in Hong Kong.
• 79% of respondents thought there was a serious or somewhat
serious problem.
• 49% of respondents thought the stringent anti-money laundering
and counter-financing of terrorism (AML/CFT) requirements were
being used to keep away less revenue generating customers.
• Global, local and Chinese banks were cited indicating that the
problem is prevalent and not isolated to a few banks. The top
eight banks mentioned were HSBC, Standard Chartered Bank,
Hang Seng Bank, Bank of China, DBS, Bank of East Asia,
Citibank, and ICBC.
• 72 or 17% of those surveyed pointed out that while they could
not open the bank account in Hong Kong, they were able to do
so in another jurisdiction with the same bank.
https://www.hkics.org.hk/media/news/attachment/NEWS_A_310497_HKICS%20Ba
nk%20Account%20Opening%20Survey%20report%20-
%20Press%20Release%20(Eng).pdf
HKMA – 8 September 2016Circular on De-risking and Financial Inclusion
‘While it is important to ensure that AML/CFT controls are
sufficiently robust and comply with all the relevant regulatory
requirements, the HKMA expects AIs to adopt a risk-based
approach (RBA) and refrain from adopting practices that would
result in financial exclusion, particularly in respect of the need for
bona fide businesses to have access to basic banking services.’
http://www.hkma.gov.hk/media/eng/doc/key-information/guidelines-and-
circular/2016/20160908e1.pdf
• Risk differentiation – The risk assessment processes should be
able to differentiate the risks of individual customers within a
particular segment or grouping through the application of a range
of factors, including country risk, business risk, product/service
risk and delivery/distribution channel risk. It is inappropriate for
AIs to adopt a one-size-fits-all approach.
• Proportionality – Based on the likely risk level of a customer, AIs
should apply proportionate risk mitigating and CDD measures. It
is inappropriate for AIs to impose requirements disproportionate
to the risk level of the customer, as this would result in undue
burden on the customer and the AI concerned.
• Not a “Zero Failure” regime – RBA does not require or expect a
“zero failure” outcome. While AIs should take all reasonable
measures to identify ML/TF risks at the account opening stage
and, for existing customers, on an ongoing basis, it is unrealistic
to expect that no ML/TF activities would ever occur through the
banking system. AIs are not required to implement overly
stringent CDD processes with a view to eliminating, ex-ante, all
risks. Otherwise, such an approach would result in a large
number of bona fide businesses and individuals not being able to
open or maintain accounts.
• Transparency – Information and documentation requirements for
CDD purposes should be clearly set out and easily accessible to
new and existing customers. All retail banks are required to
enhance the transparency of account opening processes by
uploading basic information about the relevant procedures and
information and documentation requirements on their websites.
AIs should explain to customers the rationale for the information
requested and endeavor to assist customers in taking steps or
providing alternatives that can help satisfy the CDD processes
and introduce review mechanisms for unsuccessful applicants.
• Reasonableness – CDD processes and documentation requirements of
AIs should be relevant and pragmatic with respect to the customers’
background and circumstances. Furthermore, AIs should not use
AML/CFT as the ground for closing or rejecting an account when it is
actually for other considerations.
• Efficiency – AIs should have appropriate arrangements in place to
facilitate customers’ initiation of the account opening process. AIs are
encouraged to introduce online applications if practicable. AIs should
also maintain adequate communication with customers throughout the
account opening process by, for example, providing interim updates
about the progress of their applications (such as whether any
documents remain outstanding), timely feedback of the results of their
applications, and where an application is rejected, the reason for
rejection as appropriate.
Conclusion
There is a need for Hong Kong to regulate CSPs in line with its international obligations
This affects not only CSPs but the ease of doing business in Hong Kong
Only professional and FATF compliant CSPs would be readily accepted by banks and financial institutions
As Hong Kong is coming up for its mutual evaluation by 2018, the Singapore and other models should be studied, to maintain the leadership position of Hong Kong