FINANCIAL AND MONETARY AFFAIRS
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laundering. The FATF's second mutual evaluation of Hong Kong, China was successfully completed in April 1998 and the report was formally adopted in June 1999. The final report by the examiners generally gave a positive assessment of the efforts made by Hong Kong, China since the last evaluation in 1994. It acknowledged that Hong Kong, China had made significant progress in complying with the FATF's Forty Recommendations, notably through the adoption of a more effective and comprehensive legal framework to combat money laundering and to encourage suspicious transactions reporting. It commended the efforts of the HKMA in promoting the vigilance of authorised institutions in filing suspicious transaction reports. The FATF suggested, however, that further improvements could be made in the quality of the reports and that the industry associations could play a more active role in raising the awareness of institutions of this matter. The Government agrees that more can be done in these respects. An inter-agency working group has been established by the Government comprising representatives from the Police, Security Bureau, Financial Services Bureau, the HKMA, SFC, Commissioner for Insurance Office, the HKAB and the DTC Association to recommend ways of improving communication between the law enforcement authorities and the financial sector and enhancing the quality of reports made to the Joint Financial Intelligence Unit.
On the international front, the HKMA has also contributed to other typology and self-assessment exercises by the FATF, and has taken part in the Asia Pacific Group on Money Laundering, a regional group recently formed to promote the adoption of the best anti-money-laundering practices by Asian countries. Domestically, the HKMA has participated actively in seminars, workshops and various forums to promote a general awareness in the banking sector of money laundering and of the HKMA's policy guidelines on the subject.
The Securities and Futures Commission (SFC)
The SFC was established in May 1989 following enactment of the Securities and Futures Commission Ordinance (SFCO). This represented the first important phase in the overhaul of the market regulation in Hong Kong and the implementation of one of the most important recommendations made by the Securities Review Committee in May 1988.
The SFCO transfers to the SFC the functions of the former Securities Commission, the Commodities Trading Commission and the Office of the Commissioner for Securities and Commodities Trading. It provides a general regulatory framework for the securities and futures industries, leaving certain elements to be covered by regulations, administrative procedures and guidelines developed by the Commission.
The SFC exercises prudential supervision over the securities, financial investment and 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, the Leveraged Foreign Exchange Trading Ordinance, and part of the Companies Ordinance in so far as it relates to prospectuses and purchases by a company of its own shares. These ordinances. provide a regulatory framework within which the securities, futures and investment