Hong Kong banks told to report potential breaches of security law
Transactions that could violate Beijing-imposed law should be treated the same as if financing terrorism, says guidance
Hong Kong-based banks have been told to report any transactions that they believe may violate the national security law, in new advice from the financial regulator.
The Hong Kong Monetary Authority updated its advice to companies last month, in an amended document of frequently asked questions, to say transactions suspected to be linked to the law should be treated the same as transactions suspected to be money laundering or financing terrorism.
The national security law was imposed on Hong Kong by Beijing in late June, broadly outlawing acts of secession, subversion, foreign collusion and terrorism. In the months since the law passed it has been used in a citywide crackdown on dissent and the pro-democracy movement that brought millions to the streets in last year’s protests.
First reported by the Financial Times, the updated advice is not an official guideline but applies to both Hong Kong and international banks, and was drafted with the assistance of the Hong Kong Association of Banks. Until there are official regulators it leaves financial institutions obliged to determine what transactions could constitute a reportable breach of the national security law, which has been widely criticised as draconian and dangerously broad and ill defined.
“The obligation for reporting under the NSL will be triggered when an [authorised institution] ‘knows’ or ‘suspects’ that any property is offence related property,” it said, meaning the proceeds of a criminal breach.
“The time frame for reporting is also the same, ie [authorised institutions] should file a [suspicious transaction report] to the [Joint Financial Intelligence Unit] as soon as reasonably practicable.”
The intelligence unit is jointly run by Hong Kong’s police force and its customs and excise department to manage the suspicious transaction reporting regime.
The implementation of the security law bypassed Hong Kong’s parliament but occurred with its blessing, and both the central government and Hong Kong government have since been targets of financial and diplomatic sanctions in response. In August the US sanctioned almost a dozen officials and has warned any financial institutions against engaging significantly with figures whom the US says are undermining Hong Kong’s autonomy.
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