SFC updated financial crime guidelines now effective

25 October 2018 | Asia | Articles

The regulator has now published amendments to their AML and CFT Guidelines and following the consultation this summer. Those responsible for financial crime should have already familiarised themselves with the consultation and now need to act to address the changes.

The SFC consultation paper was issued in July covering its proposals to amend both the ‘Guideline on Anti-Money Laundering and Counter-Terrorist Financing (for Licensed Corporations)’ and the ‘Prevention of Money Laundering and Terrorist Financing Guideline’ issued by the Securities and Futures Commission for Associated Entities.

Changes to PEP definition

The SFC expanded the definition of politically exposed persons, or PEPs, to include persons who have been trusted with a prominent function by an international organisation and extend the special requirements for foreign PEPs to high risk business relationships with domestic PEPs and international organisation PEPs. The amendments also permit the licensed corporations (LCs) not to pursue the customer due diligence process if they reasonably believe that performing the process will tip-off the customer, and require them to file a suspicious transaction report (STR) to the Joint Financial Intelligence Unit (JFIU) in these circumstances.

Risk-based onboarding

In addition, the changes provide increased flexibility under the risk-based approach. LCs thus can simplify the identification and verification processes when onboarding a natural person customer by adopting reasonable risk-based measures. As for verification of identity of legal persons, obtaining a company search report is no longer mandated as the only means to verify the existence of a customer which is a locally incorporated company.

Further AML/CFT guidelines

The SFC has provided additional guidelines to facilitate market participants’ compliance with their AML/CFT obligations. The key amendments cover situations such as non face-to-face identification, ultimate owner/controller of legal person customers and requests from law enforcement agencies.

Following the launch of the consultation, market participants and interested parties were required to submit their feedback to the SFC by August 9, 2018. The regulator has now published the amendments dated November 2018.