FINANCIAL AND MONETARY AFFAIRS
adopt to guard against money-laundering. The objective is to ensure that Hong Kong's system to prevent money-laundering conforms to international standards.
The Commissioner of Insurance and the Securities and Futures Commission (SFC) have also taken initiatives to ensure that the insurance and securities and futures indus- tries, respectively, take appropriate measures to guard against money-laundering. These initiatives include the issue, in December 1993, of a guideline by the Commissioner of Insurance and a plan for rules to be drawn up by the SFC to require appropriate action to be taken by registered persons.
Stepping up efforts to combat money-laundering, the HKMA plans to further revise its guideline to take into account amendments to existing money-laundering laws and new legislation in this area. For example, the recently-enacted Organised and Serious Crimes Ordinance has extended the money-laundering offence to other indictable offences. The Hong Kong Association of Banks also produced, in 1994, a training package that aims to improve the awareness of frontline bank staff in combating the money-laundering problem. The SFC, which was established in 1989 in response to the weakness in Hong Kong's financial markets at the time of the October 1987 world stock market crash, exercises prudential supervision over the securities, financial investment and commodities futures industries in Hong Kong.
It administers the Securities and Futures Commission Ordinance, the Securities Ordinance, the Protection of Investors Ordinance, the Commodities Trading Ordinance, the Stock Exchanges Unification Ordinance, the Commodities Exchanges (Prohibition) Ordinance, the Securities (Clearing Houses) Ordinance, the Securities (Disclosure of Interests) Ordinance, the Securities (Insider Dealing) Ordinance and part of the Companies Ordinance in so far as it relates to prospectuses and purchases by a company of its own shares. During the year, the commission assumed additional regulatory responsibilities for leveraged forex trading targeted at the retail end of the market.
The Securities Ordinance and the Stock Exchanges Unification Ordinance, together with the Securities and Futures Commission Ordinance, provide a framework within which dealings in securities are conducted and the stock exchange operates, enabling trading in securities to be regulated. They require the registration of dealers, dealing partnerships, investment advisers and other intermediaries. They also provide for the investigation of suspected malpractices in securities transactions and the maintenance of a compensation fund to compensate clients of defaulting brokers.
The Protection of Investors Ordinance prohibits the use of fraudulent or reckless means to induce investors to buy or sell securities, or to induce them to take part in any investment arrangement in respect of property other than securities (the latter being controlled by the Securities Ordinance). It regulates the issue of publications relating to such investments by prohibiting any advertisement inviting investors to invest without the advertisement first being submitted to the commission for authorisation.
The Commodities Trading Ordinance, together with the Securities and Futures Commission Ordinance, provides a regulatory framework within which the Futures Exchange operates and dealers, commodity trading advisers and representatives conduct their business. It includes provisions for the registration of dealers and their representatives, and the maintenance of a compensation fund to compensate clients of defaulting commodity dealers.
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