The new guidelines, which will replace the existing Prevention on Money Laundering and Terrorist Financing Guidance Note published by the SFC, provide guidance to the financial industry relating to, amongst other things, the operation of the relevant provisions of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (AMLO).

The enacted AMLO was gazetted on July 8, 2011, after two rounds of consultation conducted by Hong Kong’s Financial Services and Treasury Bureau. Its purpose is to enhance the AML/CTF regime in Hong Kong's financial sector, so as to meet the latest international standards, especially in respect of customer due diligence (CDD) and record keeping.

On September 30, 2011, the SFC launched a consultation to invite comments on the then-proposed guidelines, and then received submissions from industry practitioners, trade associations and professional bodies in response before the expiry date of November 18. Respondents generally found the guidelines helpful, and some sought clarification on specific matters and adaptation of certain requirements to facilitate compliance.

The SFC amended the draft guidelines in a number of areas to address comments whilst ensuring that they remain in line with international AML/CFT standards, and they will now provide a uniform set of requirements applicable to all financial institutions (FIs) in the banking, securities, insurance and remittance and money changing sectors.

Their key objective is to assist licensed corporations in designing and implementing appropriate and effective AML policies, procedures and controls, so as to comply with the new regulatory requirements. It is recognised that supplementary or sector-specific guidance may be necessary or appropriate for the different sectors, but the generic guidelines are considered as adequate and appropriate to the securities sector.

Given the significant differences that exist in the organizational and legal structures of different FIs, as well as the nature and scope of the business activities conducted by them, it is therefore accepted that there exists no single set of universally-applicable implementation measures. As such, the senior management of FIs may tailor-make these measures to their particular business risk profile, but, where there are to be departures from the generic guidance provided, FIs should document the rationale for so doing and be prepared to justify them.

Extensive guidance is also provided on CDD requirements for FIs under the AMLO, and how they can be met. It lists out the steps an FI should take when carrying out CDD and cites examples of relevant information that should be obtained.

Detailed guidance is further given in relation to CDD to be conducted according to different types of customers (for example, individuals, corporations and partnerships); on beneficial owners, persons purporting to act on behalf of customers and pre-existing customers; the timing of identification and verification of identity; and keeping customer information up-to-date.