Financial and Monetary Affairs ❘ 73
incorporated Als in accordance with the requirements and timetable recommended by the Basel Committee on Banking Supervision (commonly referred to as Basel II). Banking (Capital) Rules and Banking (Disclosure) Rules have been made by the Monetary Authority under the Banking Ordinance to bring the capital adequacy and disclosure requirements in line with the recommendations of the Basel Committee.
The HKMA has taken various initiatives to further strengthen the supervisory framework for the prevention of money laundering and terrorist financing. An Industry Working Group was established in June 2006 to promote industry standards and best practices in the area. The Supplement to the Guidelines on Prevention of Money Laundering was further refined in November 2006 to give effect to latest international standards in relation to wire transfers.
The HKMA continued to work closely with the SFC to ensure that both banks. and non-bank financial intermediaries are subject to consistent regulatory measure under the securities regulatory framework. During the year, the HKMA and the SFC for the first time jointly disciplined three current and former relevant individuals of a registered institution. The HKMA also took disciplinary action against a relevant individual and recommended that the SFC take disciplinary action against a former relevant individual in another case. The procedural improvements completed during the year, together with the expansion of the resources, made the investigation and disciplinary review process under the securities regulatory regime more efficient and effective.
The HKMA continued to improve the banking sector infrastructure to further strengthen the stability of the banking system. Assisted by the HKMA, the Hong Kong Deposit Protection Board completed all preparatory tasks and launched the Deposit Protection Scheme on September 25, 2006. Starting from that date, eligible depositors are entitled to compensation of up to $100,000 in the event of a bank failure.
The HKMA continued to strengthen its supervisory framework to promote a safe and sound environment for internet banking development in Hong Kong. In 2006, the banking sector saw continuing growth in the acceptance of internet banking services in Hong Kong. During the year, the number of personal internet banking accounts and business internet banking accounts increased by 15 per cent to around 3.8 million and 44 per cent to about 234 000 respectively. To ensure a safe operating environment for internet banking, Hong Kong is one of the first jurisdictions among developed financial markets to require two-factor authentication for high-risk transactions conducted through internet banking. Since the launch of two-factor authentication in May 2005, 30 Als have implemented this function and around 1.4 million customers (a 49 per cent increase compared with the end of 2005) have registered for such service. As regards international cooperation, the HKMA hosted the International Conference for Information Technology Supervision in April 2006 as a forum for banking supervisors from 15 major financial markets to share their experiences in the supervision of internet banking and technology risk management.