The Hong Kong Monetary Authority (HKMA) announces the completion of an investigation and disciplinary proceedings for 33 Financial Services Limited (33FS) under the Payment Systems and Stored Value Facilities Ordinance (PSSVFO).

The regulator has reprimanded and ordered 33FS to pay a pecuniary penalty of HK$875,000 for contravening section 8Q of the PSSVFO as it failed to fulfill the minimum criterion relating to anti-money laundering and counter-terrorist financing measures under section 6(2)(b) of Part 2 of Schedule 3 to the PSSVFO.

The disciplinary action follows an on-site examination and further investigation by the HKMA which found that, during the period from November 2016 to June 2019, 33FS failed to have in place adequate and appropriate systems of control to comply with the relevant paragraphs of the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) for Stored Value Facility (SVF) Licensees.

Specifically, the contravention relates to deficiencies in 33FS’ systems of control in two areas, namely:

  • (a) continuously monitoring business relationships in respect of transaction monitoring; and
  • (b) implementing an effective name screening mechanism.

In deciding the disciplinary action, the regulator took into account a variety of factors, including the seriousness of the investigation findings and the need to send a clear deterrent message to 33FS and the industry about the importance of effective controls and procedures to address money laundering (ML) and terrorist financing (TF) risks.

Ms Carmen Chu, Executive Director (Enforcement and AML) of the HKMA, said,

“While the majority of the SVF sector is characterised by lower ML/TF risks in view of the business nature, higher risk situations may emerge as business scale and scope develop, such as prepaid cards being misused for cash withdrawals funded by third-party’s (non-cardholders’) deposits.

All SVF licensees are expected to make reference to the lessons learnt from this case as well as the guidance provided by the HKMA in the Guideline and circulars in their ongoing efforts to have in place effective AML/CFT systems of control for identifying, assessing and managing ML/TF risks, especially when encountering higher ML/TF risk situations.”