Threats: 

According to the 2022, HK NRA, the overall 2022 ML threat was rated “Medium High”. The terrorist financing and proliferations financing risks were rated at “Medium – Low”. Domestically, fraud was rated as “High” and drug trafficking as “Medium High”. Internationally, fraud was also rated as “High” while drugs, corruption and tax evasion pose “Medium High” threats. The 2022 NRA states that, “In terms of the overall assessment, the local crime rate has remained at a low level since the last NRA report, though the forms in which predicate offences are committed have seen changes. In particular, it is observed that for both domestic & external crimes, predicate offences involving the use of the Internet, email, & social media are increasingly common due to the advancement of technology, the prevalence of electronic financial services, & social distancing measures arising from the COVID-19 pandemic. Further, given Hong Kong’s status as an international financial centre and trading hub, it is observed that Hong Kong continues to be exposed to both external & internal ML threats, in particular transnational/ cross-border ML syndicates, given its status as an international finance, trade & transportation centre. Moreover, transnational criminals are in general more sophisticated in the ML methods they employ”.

Sector Vulnerabilities & Risks:

According to the 2022, HK NRA, the banking sector was assessed to be “High”, MSOs as “Medium High”, Stored Value Facilities & Securities as “Medium & Money Lenders, the Insurance sector & VASPS as “Medium Low”.

Responses:

HK MER was published in 2019 with the latest FUR in 2023. HK is compliant 11/40 Recommendations, Largely Compliant in 25/40 Recommendations, Partially Compliant in 4/40 Recommendations and Non Compliant in 0 Recommendations.

Recommendations for Partially Compliant Ratings are R12 (Politically Exposed Persons), R15 New Technologies, R22 (DNFBP CDD), R 23 (DNFBP Other Measures), R25 (Transparency of BO of Legal Arrangements).

On Effectiveness, HK received 0/11 Highly Effective Ratings, 6/11 Substantially Effective Ratings & 5/11 Moderately Effective Ratings & 0/11 Low Effective Ratings.  The ME ratings were for IO3 (Supervision), IO4 (Preventative Measures), IO5 Legal Persons & Arrangements), IO7 (ML Investigations & Prosecutions & IO11 (WMD Proliferation Prevention).

Key Outcomes Performance Data for HK:

FIU Staffing: 80

SARs Reported: 51,588

SAR Conversion Rate: 37.1%

PPP: No

NRA: Yes latest AML in 2022

ML Convictions: 101 in 2022

Human Trafficking Convictions: 4 in 2021

Foreign Bribery Convictions: 2 between 2018-2021

Assets Seized: US$44.9 Million (0.35% of estimated financial crime proceeds at 3.6% of GDP) in 2022) 

Assets Confiscated: US$9 Million (0.07% of estimated financial crime proceeds at 3.6% of GDP) in 2022