GCFFC Submission to HKMA Public Consultation

Summary

Since its inception, the GCFFC has advocated for increased collaboration and information sharing as a key tenet in improving the effectiveness in fighting financial crime. The Coalition also supports maintaining privacy and data protection and recognises a balance has to be achieved.

We note and support the measures Hong Kong has already taken to promote collaboration and information sharing, such as:

  • the 24/7 stop-payment mechanism operated under Anti-Deception 7,
  • the public-private information sharing platform Fraud and Money Laundering Intelligence Taskforce (FMLIT) established in 2017,
  • the HKMA AML Regtech Lab launched since 2021,
  • the anti- operated by the HKPF launched in November 2022, the Financial Intelligence Evaluation Sharing Tool (FINEST) established in June 2023,
  • the Anti-Scam Consumer Protection Charter launched in June 2023,
  • the establishment of the Anti-Deception Alliance announced in November 2023
  • The Office of the Communications Authority (OFCA) SMS Registration Scheme announced in December 2023.

 

Many of these initiatives are in response to the growing challenges faced from digital fraud and scams, not only in terms of the numbers of victims, but also the large billions of Hong Kong Dollar losses annually incurred by Hong Kong citizens, but also the laundering of illicit funds through Hong Kong.

 

Hong Kong is one of the world’s largest international and regional financial centres attracting capital and investment from mainland China and overseas, due not least to low crime and corruption rates, the safety and soundness of its banking sector and strong financial infrastructure. Whilst these factors attract capital and wealth, they also attract criminal syndicates from overseas. These syndicates aim to exploit the city’s customers and financial system for illicit activities and thereafter quickly transfer funds scammed abroad. The Hong Kong government has stated its position clearly, for example in 2022 “the Government is committed to ensuring that Hong Kong remains on the the worlds safest and cleanest cities to work, do business and enjoy life”.

 

In response, the HKMA having confirmed tackling digital fraud and ML/TF are included in its strategic priorities for 2024 has now made a firm proposal. The proposal is to permit HIs in Hong Kong yo share information on customers, accounts and transactions strictly for the purpose of preventing or detecting financial crime by allowing AIs to alert each other to potential fraud and ML/TF concerns, thus helping to protect bank customers from losses and the banking system from being abused for fraud, money laundering and terrorist financing. This proposal must be seen in the wider fraud, financial crime and ML/TF context, and after other measures have already been taken.

 

The GCFFC believes the proposal:

  • is a necessary and proportionate response to the heightened fraud, financial crime and ML/TF threat faced by Hong Kong
  • is very likely to have a positive effect on preventing, detecting and reporting fraud financial crime and ML/TF, and
  • is very unlikely to have material unintended consequences, for example unfair financial exclusion provided the scheme is designed and operated reasonably. 

 

The GCFFC wishes to thank all the experts who worked with the GCFFC on this response. The final document can be found here: GCFFC_ HKMA Submission