Chinese language mainland officers who stash ill-gotten wealth in Hong Kong will face contemporary scrutiny over their monetary affairs underneath a deliberate tightening of cash laundering rules within the territory.

The Hong Kong authorities has proposed adjustments to the necessities on monetary establishments and advisers that may introduce checks on the financial institution accounts and transactions of politically linked folks from mainland China.

Companies in Hong Kong at present solely want to use stricter cash laundering checks on politically uncovered individuals (PEPs) “exterior of the Individuals’s Republic of China”. However Hong Kong’s Joint Monetary Intelligence Unit, the cash laundering watchdog, has proposed amending the rules to use to everybody exterior of the territory.

“The modification will make it crystal clear to banks, attorneys, accountants and others in Hong Kong that the improved due diligence necessities that apply to international PEPs should even be utilized to PEPs from China,” mentioned Alan Linning, a companion at regulation agency Mayer Brown. “Banks and regulation corporations must deal with all PEPs from China on their shoppers’ lists as high-risk prospects.”

The Chinese language authorities has lengthy been involved about illicit capital outflows and has indicated it’s eager to curb officers and different people utilizing Hong Kong and different jurisdictions to cover their wealth.

President Xi Jinping has mentioned that tackling corruption is a trademark of his management, vowing to catch each “tigers and flies” — that means senior leaders in addition to lower-ranking bureaucrats.

The hassle has been prolonged to observe Chinese language officers in Hong Kong and the territory’s personal leaders. Xi just lately appointed an anti-corruption tsar to Hong Kong, Shi Kehui, who will scrutinise the affairs of native officers.

The Hong Kong authorities closed consultations with the monetary and authorized companies industries on the proposed cash laundering adjustments on the finish of final month.

The plans will deliver the territory in keeping with suggestions made by the Monetary Motion Activity Pressure, a worldwide physique that co-ordinates coverage on soiled cash.

In a overview of Hong Kong’s cash laundering controls in 2019, the FATF criticised town’s compliance with requirements to stop the danger of breaches by PEPs and ordered it to “shut the technical hole” in relation to the foundations for PEPs from China.

The adjustments will make it more durable for any particular person linked to the Chinese language Communist celebration to maneuver cash into or round Hong Kong with out checks on their id, their public features, associates and shut household.

PEPs are thought-about as presenting the next threat of potential cash laundering breaches as a result of they’re uncovered to extra alternatives to simply accept bribes or take part in corruption.


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