ENG-2014 — Page 102

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Financial and Monetary Affairs

consultation was completed in April. The government will launch the second stage of public consultation in January 2015 to seek views on specific aspects of the resolution regime in Hong Kong (including further details on the resolution options and powers proposed in the first consultation paper, the governance arrangements and safeguards). As work is still continuing at the international level to provide guidance on the implementation of certain aspects of the new standards, including ensuring that resolution regimes are effective in the context of cross- border resolution, there may be a need to carry out a third, shorter consultation later in 2015. Subject to the outcome of these public consultations, the government aims to introduce legislative proposals into the Legislative Council by the end of 2015.

Anti-Money Laundering and Counter Financing of Terrorism

Anti-money laundering and counter financing of terrorism (AML/CFT) continues to be a key focus area for financial regulators who have strengthened specialist resources and increased their supervision of financial institutions' AML/CFT programmes. The government and financial regulators play an active role in relevant international standard setting bodies, such as the Financial Action Task Force, to ensure that Hong Kong's AML/CFT regime is in line with those standards and practices.

Auditor Regulatory Reform

The international trend is for the oversight of the regulation of auditors to be independent of the profession itself. In 2014 the government conducted a three-month public consultation, ending in September, on proposals to enhance the independence of our audit regulatory regime from the audit profession. The government plans to issue the consultation conclusions in 2015.

Establishment of an Independent Insurance Authority

The policy objectives of setting up an independent Insurance Authority are to modernise the insurance industry regulatory infrastructure to facilitate the industry's stable development, provide better protection for policyholders, and align with international practice that financial regulators should be financially and operationally independent of the government. The necessary legislation to establish an independent Insurance Authority, the Insurance Companies (Amendment) Bill 2014, was introduced into the Legislative Council on 30 April 2014.

Risk-based Capital Framework for the Insurance Industry

In September, the Insurance Authority (IA) launched a three-month consultation on the proposed Risk-based Capital framework for the Hong Kong insurance industry. The framework seeks to align Hong Kong's insurance regime with international standards and make capital requirements more sensitive to the level of risk that insurance companies are bearing. The IA will conduct another round of consultation on the detailed proposals after carrying out quantitative impact studies.

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