Hong Kong Financial Authority Govt Director Reveals how They’re Defending Shoppers from Rising Threats

In a keynote speech that targeted on fraud and monetary crime at a convention in Asia, Carmen Chu, Govt Director (Enforcement and AML), Hong Kong Financial Authority, mentioned anti-money laundering and monetary crime danger points and the power of authorities to handle these issues.

Whereas talking on the Fraud and Monetary Crime Asia 2021 Convention, Chu famous that there are specific challenges offered by on-line fraud and associated cash laundering. Chu mentioned how regulatory authorities, working intently with the trade, are at the moment serving to to create an efficient response “to discourage, detect and disrupt new and rising threats to companies and people.”

She famous that the respective AML and danger administration techniques are in a position “to ship a more practical return on the large funding on the institutional, sectoral and nationwide ranges.” She added that the required adjustments embrace “richer knowledge streams like digital footprints to drive the beneficial properties from analytics; technology-enabled data sharing partnerships to ship extra responsive and actionable suspicious exercise reporting; and, for regulators, data-driven supervision and trade engagement.”

Chu additionally talked about that the previous 12 to 18 months have been “a landmark for the banking sector” in Hong Kong. The launch of eight digital banks and collective efforts throughout the area’s banking sector have been key when overcoming main challenges “arising from the pandemic – banks needed to make adjustments to fulfill buyer demand inside a really quick time to launch or broaden digital and on-line monetary companies.”

Chu additionally famous that whereas that is within the pursuits of shoppers and “has introduced large advantages, the worldwide AML neighborhood, led by the Monetary Motion Process Power (FATF), noticed elevated ranges of on-line fraud and cybercrime.”

Chu additionally talked about that the dimensions at which the net economic system was creating has been “matched solely by the more and more subtle makes an attempt of legal networks to use it.”

She added that the dimensions and velocity with which this has occurred “are breathtaking; fraudulent web sites and spam emails concentrating on Authorities-led pandemic aid efforts, for instance, typically surfaced inside hours of the initiatives being launched.”

She continued:

“Hong Kong has not been proof against this world phenomenon. There have been over 15,000 deception circumstances in 2020, nearly doubling from about 8,000 circumstances within the earlier yr. The same improve was famous by the HKMA in financial institution buyer complaints associated to fraud and monetary crime, which rose by about 120% within the first half of 2021 when put next with the identical interval a yr in the past.”

Chu additional famous:

“It’s not all dangerous information, nevertheless. Once we coordinate successfully, after we formulate and implement methods for the private and non-private sectors to work intently collectively and take well timed actions, we will make an influence.”

The Anti-Deception Coordination Centre of the Police, which is accountable for main the motion in opposition to fraudulent actions, has managed to intercept HKD 6.three billion “conned from victims of cellphone and web scams in its first three years of operation since 2017,” Chu revealed whereas noting that the Centre “intercepted a staggering HKD three billion in a single yr in 2020, and none of this success could be potential with out the shut cooperation of banks, 24 hours a day and seven days per week, in serving to disrupt fraud and monetary crime and defending prospects from losses.”

She added:

“These numbers have to be a matter of concern for everybody within the world AML ecosystem and the broader economies. All of us must mirror on how efficient we’re being, whereas staying alert to new tips and doubling our efforts to sluggish and reverse the tide. This isn’t to say that we anticipate to have the ability to pre-empt all fraud and monetary crime, however that when these crimes sadly occur, our responses are fast and focused.”

Chu additionally talked about that the HKMA’s method has been guided by their dedication to world  requirements and associated greatest practices in how AML and monetary crime danger administration techniques have been carried out.

HKMA’s ‘Fintech 2025’ technique additionally outlines how progressive tech may also help with attaining “efficient outcomes.” She additional revealed that they’ve been working to understand their imaginative and prescient, “starting with an AML/CFT RegTech Discussion board in 2019 to lift trade consciousness and discover the position that know-how might play in AML work.”

She added that the HKMA usually releases totally different papers and studies “to share Regtech use circumstances together with AML, and shall be placing all related assets in [their centralized ‘Regtech Data Hub.’”

She additionally famous:

“We should additionally speak about knowledge – high quality knowledge – to drive Regtech adoption. Particularly, the provision of richer knowledge streams, equivalent to digital footprint knowledge, with correct integration, can have a big influence on system effectiveness.”

She added that different exterior knowledge and knowledge are additionally “changing into more and more vital in monitoring buyer danger and to this finish, [they] have not too long ago shared key observations and greatest practices from a thematic assessment to help banks in figuring out and utilizing these assets.”

Chu confirmed that they’ll additional these items of labor later in 2021 after they introduce their first interactive lab session “that includes machine studying within the space of monitoring.”

She identified that a few of these applied sciences “featured prominently within the successes we now have seen in figuring out and disrupting mule account networks linked to COVID-19 and funding scams, which have been shared by way of our public-private data sharing partnership, the Fraud and Cash Laundering Intelligence Taskforce – or FMLIT.”

The FMLIT partnership has seen dramatic progress throughout the previous three years, “bringing about clear enhancements in our collective skills to determine and disrupt monetary crime,” Chu revealed.

She additionally shared:

“Since its launch in 2017, actions taken by banks by way of FMLIT have recognized over 11,000 financial institution accounts which have been beforehand unknown to regulation enforcement businesses, resulting in restraint or confiscation of about HK$700 million in crime proceeds primarily from funding scams and different frauds involving monetary impacts on prospects and/or banks themselves.”

Whereas addressing how efficient they’ve been their AML and monetary crime work, she revealed:

“It’s important for regulators to ask ourselves how AML/CFT supervision wants to vary within the age of digital innovation. The HKMA’s method is to construct on our sturdy foundations as a risk-based AML supervisor, whereas recognizing the necessity to consistently study and adapt to the digital age. We’re implementing a sequence of adjustments to higher leverage the newest know-how in our supervisory work, whereas constructing capability to permit us to undertake new applied sciences and methods as they emerge.”

To assessment the total speech, examine right here.