HKMA Imposes Penalty on WeChat Pay Hong Kong for AML Failures

The
Hong
Kong
Monetary
Authority
(HKMA)
has
announced
a
disciplinary
action
against
WeChat
Pay
Hong
Kong
Limited
(WPHK)
for
violations
under
the
Payment
Systems
and
Stored
Value
Facilities
Ordinance
(PSSVFO).
According
to
the
HKMA,
WPHK
is
required
to
pay
a
pecuniary
penalty
of
HK$875,000
for
failing
to
meet
regulatory
standards.

Details
of
the
Violation

The
HKMA’s
investigation,
which
covered
the
period
from
August
25,
2016,
to
October
24,
2021,
found
that
WPHK
did
not
have
adequate
systems
in
place
to
comply
with
anti-money
laundering
(AML)
and
counter-financing
of
terrorism
(CFT)
guidelines.
The
identified
deficiencies
were
primarily
in
two
areas:

• Undertaking
  customer
  due
  diligence
  (CDD)
  reviews
  upon
  trigger
  events.
• Applying
  enhanced
  due
  diligence
  measures
  in
  high-risk
  situations
  to
  mitigate
  money
  laundering
  and
  terrorist
  financing
  risks.

Factors
Considered
in
Disciplinary
Action

The
HKMA
took
several
factors
into
account
when
deciding
the
disciplinary
action:

• The
  seriousness
  of
  the
  investigation
  findings.
• The
  need
  to
  send
  a
  clear
  deterrent
  message
  to
  the
  industry
  regarding
  the
  importance
  of
  effective
  AML
  and
  CFT
  controls.
• Remedial
  measures
  taken
  by
  WPHK
  to
  address
  the
  deficiencies.
• WPHK’s
  self-reporting
  of
  the
  matter
  to
  the
  HKMA.
• WPHK’s
  lack
  of
  previous
  disciplinary
  records
  and
  its
  cooperation
  in
  resolving
  the
  identified
  issues.

Official
Statements

Raymond
Chan,
Executive
Director
(Enforcement
and
AML)
of
the
HKMA,
emphasized
the
importance
of
SVF
licensees
applying
enhanced
due
diligence
measures
in
potentially
high-risk
situations.
“These
enhanced
due
diligence
measures
should
be
effective
in
ensuring
that
the
associated
money
laundering
and
terrorist
financing
risks
are
properly
managed,”
Chan
stated.

For
further
information,
the
official
statement
of
disciplinary
action
can
be
accessed
from
the

Hong
Kong
Monetary
Authority.

Industry
Implications

This
disciplinary
action
serves
as
a
significant
reminder
to
all
stored
value
facility
(SVF)
licensees
in
Hong
Kong
about
the
critical
necessity
of
maintaining
robust
AML
and
CFT
controls.
The
HKMA’s
decision
highlights
the
regulatory
body’s
commitment
to
ensuring
financial
systems’
integrity
and
sending
a
clear
message
on
the
consequences
of
non-compliance.

Image
source:
Shutterstock