Hong Kong Monetary Authority has imposed a HK$12.5 million ($1.6 million) fine on JPMorgan Chase & Co’s Hong Kong branch and reprimanded it over lapses in the bank’s money laundering and terrorist financing rules, between April 2012 and February 2014.
An HKMA investigation found JPMorgan Hong Kong breached six provisions of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance.
They include failure to establish and maintain effective procedures for identifying and handling wire transfers on the SWIFT messaging system without including the names of the originators. The bank also did not do sufficient due diligence before establishing a business relationship with customers.
In deciding the disciplinary action, the authority considered it needed to send a clear deterrent message about the importance of effective internal anti-money laundering controls.
Why Your Enterprise’s Finances Rely on Employee TrainingGo to article >>
HKMA fines other lenders for similar violations
“Banks are expected to have in place anti-money laundering and counter terrorist financing systems and controls that are commensurate with the risks presented and the HKMA will take enforcement action where appropriate to reinforce this message,” added HKMA.
On its part, JPMorgan said in a statement that the incident has had no material impact to its operations and that it has strengthened internal anti-money laundering and terrorist financing mechanisms.
The local unit of JPMorgan Chase has appointed an external consultant to review its procedures and bring in measures to address the problems identified by the HKMA.
A bank representative was quoted by Reuters as saying: “We look forward to working with the independent adviser who will be appointed to review our current internal controls in Hong Kong to verify that the legacy issues have been addressed by the remedial actions already undertaken by JPMorgan.”
Hong Kong lenders have been stepping up their compliance to follow anti-money laundering rules. In August, the HKMA fined and reprimanded Shanghai Commercial Bank HK$5 million for similar breaches. Also earlier this year, HSBC said it would contact all retail and corporate clients to update their contract and funding source information and warned that some accounts might be suspended.