HKMA Fines UBSHK for AML Noncompliance

The Hong Kong Monetary Authority (HKMA) has taken disciplinary action against UBS AG, Hong Kong Branch (UBSHK). According to section 21(2)(c) of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, the regulator ordered UBS to pay a HK$9,000,000 pecuniary penalty.

The disciplinary action was taken after the HKMA conducted an on-site examination and subsequent investigation and discovered that UBSHK had violated four specific provisions.

UBSHK failed to establish and maintain appropriate procedures for performing periodic inspections of client accounts managed by UBSHK to verify that the customer information it collected was accurate and up-to-date. The following are some of the flaws:

(a) a system error in relation to extraction of one group of customers due for periodic review; and

(b) in respect of another group of customers, the failure to: (i) update and set out in its policy and procedures the specific trigger events for the conduct of periodic review; (ii) communicate effectively the ad-hoc periodic review procedures to the relevant staff; and (iii) establish an effective monitoring and control procedure for due implementation of the policy requirements of the periodic review process.

UBSHK failed to complete periodic reviews in respect of 5,726 customers as a result of poor procedures.

The HKMA considered a number of criteria in deciding the penalty, including the seriousness of the investigation findings and the fact that UBSHK took immediate corrective and enhancement efforts to rectify the regulator's inadequacies.

Earlier, Fazzaco reported that HKMA has rolled out an AML regtech platform​.