What are the key priorities for Hong Kong's financial institutions this year?

Battling anti-money laundering remains high on their agenda.

Financial crime compliance ranks high on the agenda of Hong Kong’s financial institutions this year amidst an upcoming visit and evaluation report from the Financial Action Task Force (FATF) later this year, according to a report from KPMG China.

“Given the FATF’s initiatives, we expect anti-money laundering (AML) will remain a top priority for everyone. We are seeing a real demand from clients for technology solutions to help improve and automate parts of their AML processes,” said KPMG China Head of Banking and Capital markets Paul McSheaffrey. 

The FATF is an inter-governmental body that sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other threats to the international financial system. 

Its earlier report commended Hong Kong’s legal structure, financial intelligence unit and preventive system but admits that its criminal confiscation regime could be improved to extend to all predicate offenses. 

Cybersecurity is also a key priority for Hong Kong’s financial institutions this year amidst an overall effort to strengthen core risk management governance and controls, added KPMG. 

“Hong Kong has to date not had a significant data leak or cybersecurity incident but institutions should not be complacent. There is a need to continue to strengthen governance and also conduct threat assessments of where attacks could come from,” said McSheaffrey. 

Moreover, regulators are also expected to increasingly adopt innovative technologies, particularly data analytics, in their day-to-day operations to streamline supervision and gain a more comprehensive understanding of the data they gather, store and report. 

Photo from iqremix from Canada - Hong Kong Central District, CC BY 2.0