ENG-2017 — Page 108

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Financial and Monetary Affairs

International Banking Standards

As a member of the Basel Committee on Banking Supervision and the Financial Stability Board, Hong Kong is diligent in implementing international standards on banking regulation, including the Basel III framework and other post-crisis reform packages. The city implements the international standards through amending the Banking Ordinance and issuing rules supplemented by regulatory guidance.

Deposit Protection

Hong Kong maintains a robust deposit protection regime which underpins the stability of the banking system. The Deposit Protection Scheme protects eligible deposits held with banks in Hong Kong by guaranteeing compensation up to $500,000, thereby ensuring the confidence of depositors in the banking system.

Anti-Money Laundering and Counter-Terrorist Financing

Money laundering and terrorist financing 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 such threats from within the city and more so from other places. As a member of the Financial Action Task Force, Hong Kong has put in place a robust, mature and effective regulatory regime for anti-money laundering and counter-terrorist financing over the years to safeguard the integrity of its business environment and reputation as an international financial centre.

The city's regulatory framework was reinforced with the Anti-Money Laundering and Counter- Terrorist Financing (Financial Institutions) (Amendment) Bill 2017, which prescribed statutory customer due diligence and record-keeping requirements for designated non-financial businesses and professions, and the Companies (Amendment) Bill 2017, which required companies incorporated in Hong Kong to maintain beneficial ownership information.

Regulation of Stored Value Facilities and Retail Payment Systems

With the Payment Systems and Stored Value Facilities Ordinance in force, the regulatory regimes for stored value facilities (SVFs) and retail payment systems (RPSs) have been put into operation. By the end of 2017, the HKMA had issued 13 SVF licences, in addition to which three banks had rolled out SVFs. The SVF industry continued to grow during the year as the licensees introduced new services and expanded their business networks. In August, the HKMA began oversight of four RPSS through designation under the ordinance to promote safety and efficiency of the local retail payment industry.

Risk-based Capital Regime for Insurance Industry

The Insurance Authority (IA)

is engaging stakeholders in developing a risk-based capital (RBC) regime for Hong Kong's insurance industry. It plans to conduct the second quantitative impact study in 2018 to collect industry data so it can calibrate risk charges and determine the prescribed capital requirements. The IA will consult the industry on a draft Guideline on Enterprise Risk Management and Own Risk and Solvency Assessment in the first half of 2018 with a view to issuing it by year end.

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