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Hong Kong plans stricter cash laundering checks on Chinese language officers

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

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

Companies in Hong Kong presently solely want to use stricter cash laundering checks on politically uncovered individuals (PEPs) “outdoors of the Folks’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 outdoors of the territory.

“The modification will make it crystal clear to banks, legal professionals, 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 companies must deal with all PEPs from China on their purchasers’ 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” — which 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 modifications on the finish of final month.

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

In a evaluation of Hong Kong’s cash laundering controls in 2019, the FATF criticised the 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 principles for PEPs from China.

The modifications will make it more durable for any particular person linked to the Chinese language Communist social gathering to maneuver cash into or round Hong Kong with out checks on their identification, their public capabilities, associates and shut household.

PEPs are thought of as presenting a better 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.