ENG-2016 — Page 101

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Financial and Monetary Affairs

which provide more specific requirements for central counterparties that wish to provide clearing services for OTC derivatives transactions, came into effect in September 2016.

International Banking Standards

Hong Kong is a member of the Basel Committee on Banking Supervision and implements locally the international standards set by the committee for banks, including the Basel III framework and other elements of the committee's post-crisis reform package. The city implements the international standards through amending the Banking Ordinance and issuing rules supplemented by regulatory guidance.

Deposit Protection

The Deposit Protection Scheme (Amendment) Ordinance 2016 started operation on 24 March to enhance the payout process of the scheme in the event of a bank failure. It allows the adoption of gross payouts and other operational enhancements to speed up the compensation process from the previous six weeks to within seven days in most cases. The enhanced scheme strengthens banking stability and inspires depositors' confidence in the financial safety net.

Anti-Money Laundering and Counter Financing of Terrorism

Money laundering and terrorist financing (ML/TF) is a global problem that can undermine the integrity and stability of international financial markets. Being an international financial centre and an externally oriented economy, Hong Kong is inevitably exposed to ML/TF threats from within the city and more so from other places. The government enforces a robust anti-money laundering and counter-terrorist financing regime to safeguard the integrity of Hong Kong's business environment and reputation as an international financial centre.

Regulation of Stored-value Facilities and Retail Payment Systems

The Payment Systems and Stored Value Facilities Ordinance started full operation on 13 November. It empowers the HKMA to implement a licensing system for stored-value facilities and designate retail payment systems to ensure their operations are safe and robust. Thirteen licences were granted to mobile and internet payment service providers and prepaid card issuers in 2016. The licensed operators are launching new or enhanced services to provide consumers with more novel and convenient payment choices.

Independent Insurance Authority

The policy objectives of setting up an Independent Insurance Authority (IIA) are to modernise the regulatory infrastructure to facilitate the insurance 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 Insurance Companies (Amendment) Ordinance provides for a legal framework to establish an IIA and a statutory licensing regime for insurance intermediaries. It is being implemented in three stages to allow for a smooth transition from the existing regime to an IIA-administered regime. Pursuant to the ordinance enacted in 2015, the IIA has been renamed the Provisional Insurance Authority (PIA). The PIA is vested with administrative powers to undertake essential

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