XN000022-1989-03-03 — Page 3

1.

FRIDAY, MARCH 3, 1989

GUIDELINE ISSUED ON PREVENTION OF CRIMINAL USE OF

BANKING SYSTEM FOR MONEY-LAUNDERING

* * * * *

THE COMMISSIONER OF BANKING TODAY (FRIDAY) ISSUED A GUIDELINE TO ALL AUTHORISED INSTITUTIONS CONCERNING THE PREVENTION OP CRIMINAL USE OF THE BANKING SYSTEM FOR THE PURPOSES OF MONEY-LAUNDERING.

THE WORDING OF THE GUIDELINE, ISSUED UNDER SECTION 7(3) OF THE BANKING ORDINANCE, FOLLOWS CLOSELY THAT OF A STATEMENT OF PRINCIPLES ON THE SAME SUBJECT ISSUED IN DECEMBER LAST YEAR BY THE BASLE SUPERVISORS COMMITTEE.

"THE BASLE STATEMENT HAS BEEN COMMENDED ΤΟ ALL BANKING INSTITUTIONS IN THE G-10 GROUP OF COUNTRIES, AND SUPERVISORY AGENCIES IN OTHER PARTS OF THE WORLD HAVE ALSO BEEN ENCOURAGED ΤΟ ADOPT THE SAME PRINCIPLES," A GOVERNMENT SPOKESMAN SAID.

BE

"THE ISSUE OF THE COMMISSIONER'S GUIDELINE SHOULD THEREFORE SEEN AS PART OF AN INTERNATIONAL DRIVE ΤΟ COMBAT MONEY-LAUNDERING ACTIVITIES, HE ADDED.

THE GUIDELINE ACKNOWLEDGES THAT BANKS AND OTHER FINANCIAL INSTITUTIONS MAY UNWITTINGLY BE USED AS INTERMEDIARIES FOR THE TRANSFER OR DEPOSIT OF MONEY DERIVED FROM CRIMINAL ACTIVITY.

THIS IS A MATTER OF CONCERN TO THE COMMISSIONER OF BANKING AND THE MANAGEMENTS OF AUTHORISED INSTITUTIONS, AS PUBLIC CONFIDENCE IN BANKS MAY BE UNDERMINED THROUGH THEIR ASSOCIATION WITH CRIMINALS, THE SPOKESMAN SAID.

THE GUIDELINE STRESSES THE IMPORTANCE

OF

CUSTOMER IDENTIFICATION. NOTING THAT REASONABLE EFFORTS SHOULD BE MADE TO DETERMINE THE TRUE IDENTITY OF ALL CUSTOMERS REQUESTING AN AUTHORISED INSTITUTION'S SERVICES.

THE GUIDELINE ADDS THAT IT SHOULD BE AN EXPLICIT POLICY WITHIN INSTITUTIONS THAT SIGNIFICANT BUSINESS TRANSACTIONS WILL NOT BE CONDUCTED WITH CUSTOMERS WHO FAIL то PROVIDE EVIDENCE OF THEIR IDENTITY,

THE GUIDELINE GOES ON TO SAY THAT INSTITUTIONS SHOULD CONDUCT THEIR BUSINESS IN CONFORMITY WITH HIGH ETHICAL STANDARDS, AND SHOULD ADHERE ΤΟ THE LAWS AND REGULATIONS PERTAINING TO FINANCIAL TRANSACTIONS.

AUTHORISED INSTITUTIONS

SHOULD

CO-OPERATE

ENFORCEMENT AGENCIES TO THE EXTENT PERMITTED OBLIGATIONS RELATING TO CUSTOMER CONFIDENTIALITY.

FULLY WITH LAW BY CONTRACTUAL

THE SPOKESMAN