Council Meetings (Oral Question): Combating Money Laundering and Terrorist Financing Activities (2019.01.09)

MR CHAN KIN-POR (in Cantonese): President, I am also concerned that JFIU has received 280 000 STRs, but only less that 20% of them, i.e. 44 000 reports, were worth following up. I would like to ask if this reflects a problem of quality with such kind of so-called suspicious transaction reports? This is because there is no reason that only 1.5 out of 10 reports were worth following up. Does the Government have any measure that can raise the quality in this regard, i.e. increase the number of worth pursuing reports? As such, there will be no need to submit so many reports and banks or other relevant institutions can be more precise in their reporting; alternatively, they may submit reports on a need basis and make no submissions if there is no need to do so, instead of having reports that are numerous in number yet hardly of practical use as now. How will the Government improve the reporting procedures?

SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, I believe it is worth pointing out that the 92 115 STRs that JFIU received in 2017 actually represent an increase of 20.3% compared to the 76 590 reports recorded in 2016. The rise in the STRs mainly reflects an enhanced degree of awareness of anti-money laundering legislation and relevant statutory reporting obligations among various industries. Moreover, the number of STRs rose faster after the implementation of the relevant ordinance in 2016. In particular, the figure of 2016 was higher than that of 2015 by 80%. We think that one of the possibilities is that while various industries submitted STRs proactively responding to the encouragement of the authorities, they were rather cautious that they reported even those transactions which they had the faintest suspicion. In view of this situation, JFIU proactively liaised with the financial sector and designated non-financial businesses or professions to enhance the quality of STRs, so as to equip the trades concerned with the sensitivity to distinguish STRs in a more precise manner. For this reason, the number of STRs for the first nine months of 2018 has dropped to 60 313, representing a slight decrease in the overall number of STRs.

Besides, the implementation of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance in 2012 has raised the community’s awareness of AML/CFT significantly, and this is a reason accounting for the rise in the number of STRs I mentioned just now. Notwithstanding this, since the information concerned is crucial to investigation and prosecution, LEAs have all along maintained much communication with designated non-financial businesses and professions on relevant STRs and advised them on how to improve the reporting quality and ensure adequate submission of information, so as to facilitate follow-up efforts by LEAs. In our view, the figures concerned reflect that we actually have a rather robust regime for combating money laundering, which is capable of effectively preventing and detecting crimes, as well as imposing deterrent sanctions against criminals.

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