03 Jun 2020
Key observations and good practices in AML/CFT control measures were identified in recent thematic reviews of remote on-boarding initiatives, insights and observations from engagement with Authorized Institutions (AIs) and technology firms in the Fintech Supervisory Sandbox (FSS) and Chatroom as well as supervision of virtual banks.
To date, more than 10 AIs have launched remote on-boarding, while others are considering or testing similar initiatives. In the light of COVID-19 and the need for social distancing, remote on-boarding and digital delivery of financial services has become more important. We also welcome AIs to make use of the HKMA FSS to test applications leveraging on the government’s iAM Smart to enhance the efficiency of customer due diligence (CDD) processes and improve customer experience.
The review examined how AIs conducted assessment of ML/TF risks associated with remote on-boarding; how that understanding underpinned the application of a risk-based approach in the design and implementation of control measures to mitigate the identified risks; the extent to which AIs were able to effectively monitor and manage the technology adopted to remotely on-board customers; and how ongoing monitoring took into account vulnerabilities and threats, where these differed from accounts opened for customers in the presence of staff of AIs.
AIs considering to introduce remote on-boarding or enhance existing systems may make reference to the key observations and good practices set out in the Annex, together with all relevant guidance including the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Authorized Institutions) (AML/CFT Guideline). AIs are also reminded to adopt a risk-based approach in applying control measures, which includes taking into consideration the size and complexity of target customer segments and service scope when deciding whether examples of good
practices are relevant.