Chinese officials included in push for tighter anti-money laundering laws
Chinese officials could soon have their banking transactions in Hong Kong placed under greater scrutiny as the Financial Services and the Treasury Bureau mulls an amendment to anti-money laundering laws.
In a public consultation that wrapped up last month, the bureau proposed an amendment to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, or AMLO for short, that would change the definition of a “politically exposed person.” A banking institution is required to conduct enhanced due diligence checks on a PEP when such a person opens or maintains a bank account.
“We propose to amend the definition of PEP under the AMLO, from one in a place outside the People’s Republic of China to one in a place outside Hong Kong,” the consultation paper read.
Currently, the ordinance’s definition of a PEP is limited to those from foreign countries, meaning those who come from parts of China outside Hong Kong would not be covered.
Kevin Tsui, an associate professor of economics at Clemson University in South Carolina, said he believed the move was intended to prevent Hong Kong from becoming a base for offshore capital.
Tsui noted that Chinese businessman Xiao Jianhua was allegedly abducted from his hotel room in Hong Kong by Chinese public security officers in 2017, and it was unclear how Xiao’s money was moved to Hong Kong. The amendment may be intended to avoid similar situations in the future, Tsui said.
Every bank may have a different definition of PEP, some Hong Kong executives working in the sector explained. For example, some banks may already include National People’s Congress delegates or appointed Chinese Communist Party representatives for listed companies in their PEP definition.
If the amendment passes, these executives believe it will only make the definition clearer and will ensure that every bank operates according to the same standard.
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