HKMA Promoting Innovative Measures for Reducing Fraud and Financial Crimes

The HKMA has collaborated with banks and other partners, including the Hong Kong Police Force, to more effectively identify, prevent, and disrupt exploitation of the banking system for fraud and money laundering. This endeavour is part of efforts to improve the AML/CFT ecosystem’s response to rising fraud and financial crime. This has already produced the outstanding outcomes that are summarised on the next page

The Hong Kong Monetary Authority’s (HKMA) recently released report on Anti Money Laundering Regulations. Report is “AML Regtech: Network Analytics,” and it aims to encourage the use of network analytics capabilities to enhance banks’ AML response to fraud and other financial crimes.

Hong Kong’s financial system continues to be seriously endangered by fraud and financial crime. Financial losses suffered by victims and banks may have an impact on consumers’ trust in the security of banking services and products, or in the worst-case scenario, even on the security of the financial system as a whole.

Global supervisors and banks have made it a priority to build anti-money laundering (AML) systems that adhere to the guidelines established by the Financial Action Task Force (FATF) in response to this growing danger to the financial system. Since criminal organisations adapt quickly to come up with new and sophisticated ways to defraud victims and try to launder their proceeds by taking advantage of the quickness and efficiency of our financial system, these AML systems are also changing in order to remain effective in light of the speed and scale of innovation and technological advancement.

The HKMA has collaborated with banks and other partners, including the Hong Kong Police Force, to more effectively identify, prevent, and disrupt exploitation of the banking system for fraud and money laundering. This endeavour is part of efforts to improve the AML/CFT ecosystem’s response to rising fraud and financial crime. This has already produced the outstanding outcomes that are summarised on the next page.

The Hong Kong Monetary Authority (HKMA) has started a test employing network analytics to identify mule account networks and assist in halting the flow of illicit proceeds as part of its partnership with business and law enforcement. For the first time, this exercise will examine data from many banks to produce sector-level risk insights to assist evaluate the efficacy of banking-sector regulations.

In the report, it is suggested that banks strengthen their anti-deception efforts in the prevention, detection, and disruption of financial crime by merging intelligence-led analytical tools with rules-based monitoring systems. 

Additionally, it gives professional viewpoints and practical insights, sharing the experiences of banks that have previously used this capacity and assisting institutions in their investigation and use of network analytics.

Banks have already increased the number of intelligence-led suspicious transaction reports by 319% in 2022 compared to 2021 as a result of this capability. This is made possible by increased intelligence shared through the Fraud and Money Laundering Intelligence Taskforce. This capability has also resulted in an increase of 113% in criminal proceeds seized or restrained.

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