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Guideline on Anti-Money Laundering and Counter-Terrorist Financing – Address Verification Requirements
The Hong Kong Monetary Authority (HKMA) and the other relevant authorities (RAs) have been reviewing various aspects of the anti-money laundering and counter-financing of terrorism (AML/CFT) regulatory requirements for financial institutions (FIs), which include the address verification requirements stipulated in the Guideline on Anti-Money Laundering and Counter-Terrorist Financing (AML Guideline).
Taking into account feedback from various stakeholders about AML/CFT processes and industry developments, the HKMA and the other RAs have agreed to remove the address verification requirements currently set out in the AML Guideline. As a result, FIs are only required to collect address information of customers and/or beneficial owners without the need to collect documentary evidence for AML/CFT purpose. Relevant paragraphs of the AML Guideline that will be amended to reflect the removal of the address verification requirements are listed in the Annex. Such amendments to the AML Guideline are expected to be gazetted tentatively in the first half of 2018 in conjunction with other revisions to the AML Guideline resulting from the passage of Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) (Amendment) Bill 2017 (the Bill).
|AML Guideline Reference||Current Requirements||Proposed Changes|
|Customers – Individual (Paragraph 4.8.8)||An FI should obtain and verify the residential address (and permanent address if different) of a direct customer with whom it establishes a business relationship as this is useful for verifying an individual’s identity and background.||FIs are required to collect residential address.|
|Customers –Trust (Paragraph 4.8.9)||For avoidance of doubt, it is the trustee of the trust who will enter into a business relationship or carry out a transaction on behalf of the trust and who will be considered to be the customer. The address of the trustee in a direct customer relationship should therefore always be verified.||FIs are required to collect the address of the trustee.|
|Customers – Corporation (Paragraph 4.9.7)||An FI should obtain and verify the following information in relation to a customer which is a corporation:
If the business address of the customer is different from the registered office address in (d) above, the FI should obtain information on the business address and verify as far as practicable.
|FIs are required to collect the registered address and principal place of business.|
|Customers – Corporation (Paragraph 4.9.10(c))||FIs should verify the company’s registered office address in the place of incorporation.||To be repealed|
|Beneficial owners (Paragraph 4.3.6)||For beneficial owners, FIs should obtain the residential address (and permanent address if different) and may adopt a risk-based approach to determine the need to take reasonable measures to verify the address, taking account of the number of beneficial owners, the nature and distribution of the interests in the entity and the nature and extent of any business, contractual or family relationship.||FIs are required to collect the residential address of beneficial owners.|
|Other connected parties (Footnote 34 – High risk situations)||Consideration might be given to obtaining, and taking reasonable measures to verify, the addresses of directors and account signatories.||To be repealed|
|Delay in identity verification (Footnote 16)||The same principle applies to the verification of address for a direct customer; an example of a reasonable timeframe being 90 working days.||To be repealed|
|Verification methods (Paragraphs 4.8.10)||Methods for verifying residential addresses may include obtaining:
|To be repealed|
|Verification methods (Paragraphs 4.8.11)||It is conceivable that FIs may not always be able to adopt any of the suggested methods in the paragraph above. Examples include countries without postal deliveries and virtually no street addresses, where residents rely upon post office boxes or their employers for the delivery of mail. Some customers may simply be unable to produce evidence of address to the standard outlined above. In such circumstances FIs may, on a risk sensitive basis, adopt a common sense approach by adopting alternative methods such as obtaining a letter from a director or manager of a verified known overseas employer that confirms residence at a stated overseas address (or provides detailed directions to locate a place of residence).
There may also be circumstances where a customer’s address is a temporary accommodation and where normal address verification documents are not available. For example, an expatriate on a short-term contract. FIs should adopt flexible procedures to obtain verification by other means, e.g. copy of contract of employment, or bank’s or employer’s written confirmation. FIs should exercise a degree of flexibility under special circumstances (e.g. where a customer is homeless). For the avoidance of doubt, a post office box address is not sufficient for persons residing in Hong Kong or corporate customers registered and/or operating in Hong Kong.
|To be repealed|
Plese read the full PDF here.
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