UBS fined HK$9m for AML violations in Hong Kong
The Hong Kong Monetary Authority (HKMA) today announces that it has taken disciplinary action against UBS AG, Hong Kong Branch (UBSHK). The regulator ordered UBS it to pay a pecuniary penalty of HK$9,000,000, pursuant to section 21(2)(c) of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615 of the Laws of Hong Kong).
The disciplinary action follows an on-site examination and further investigation by the HKMA which found that UBSHK contravened four specified provisions.
UBSHK failed to establish and maintain effective procedures for conducting the periodic reviews of customer accounts managed by UBSHK to ensure that the customer information obtained by it was up-to-date and relevant. The deficiencies include:
- (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.
As a result of the ineffective procedures, UBSHK failed to conduct periodic reviews in respect of 5,726 customers during.
In addition, UBSHK failed to carry out customer due diligence (CDD) measures specified in section 2(1) of Schedule 2 to the AMLO in respect of a number of pre-existing customers of the samples reviewed by the HKMA when suspicious transaction(s) took place with regard to each of these customers. UBSHK completed the periodic reviews for these customers in a period of more than eight to 22 months after filing of the respective suspicious transaction reports (STRs) with the Joint Financial Intelligence Unit (JFIU). UBSHK thus contravened section 6(1) of Schedule 2 to the AMLO.
Further, UBSHK failed to terminate the business relationships with some pre-existing customers as soon as reasonably practicable when it was unable to comply with section 6(1) of Schedule 2 to the AMLO. The business relationships with these customers were terminated in a period of more than eight to 31 months after filing of the respective STRs with the JFIU. As a consequence, UBSHK contravened section 6(2) of Schedule 2 to the AMLO.
Having considered all of the evidence and the representations of UBSHK, the regulator has found that UBSHK contravened the four specified provisions.
In determining the penalty, the HKMA has taken into account various factors, such as the seriousness of the investigation findings, as well as the fact that UBSHK has taken prompt remedial and enhancement actions to address the deficiencies identified by the regulator.