HKMA Letter on Risk-based Approach for Customer Due Diligence

The letter shares the HKMA’s recent observations from its ongoing supervisory engagement with AIs, including:

• While CDD measures of most AIs for customer on-boarding and reviews are appropriate and in line with the identified ML/TF risks, the HKMA continues to see cases where there is room for improvement in both the design and execution of CDD;
• Where AIs have been able to implement AML/CFT control processes which are risk sensitive, the design of the controls takes into account the treat-customers-fairly principles, balances the provision of good customer experience with managing ML/TF risks and generally provides sufficient support to frontline staff;

AIs are expected to review existing HKMA guidance to ensure their CDD policies and procedures accurately reflect the legal and regulatory requirements.