Circular to Intermediaries and Associated Entities - Anti-Money Laundering / Counter-Financing of Terrorism (“AML/CFT”)
Address Verification Requirements

11 Oct 2017



Circular to Intermediaries and Associated Entities 

Anti-Money Laundering / Counter-Financing of Terrorism (“AML/CFT”)

Address Verification Requirements 

The Securities and Futures Commission (“SFC”) and the other relevant authorities (“RAs”)Note 1 have been reviewing various aspects of the AML/CFT regulatory requirements for financial institutions  (“FIs”)Note 2, which include the address verification requirements stipulated in the Guideline on Anti-Money Laundering and Counter-Terrorist Financing (“AML Guideline”)Note 3

Taking into account feedback from various stakeholders about AML/CFT processes and industry developments, the SFC 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 Appendix.  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 (“Bill”)Note 4.

In the meantime, any absence of verification of address (as otherwise envisaged by paragraphs in the Appendix) will be regarded by the SFC and the other RAs as justified under paragraph 1.7 of the AML GuidelineNote 5.  Intermediaries and associated entities may start reviewing and adopt the changes as appropriate. 

It should be noted that intermediaries may, under certain circumstances, still require address verification from a customer for other purposes (e.g. group requirements, other local or overseas legal and regulatory requirementsNote 6).  In such circumstances, they should communicate clearly the reasons of requiring verification of address to the customer.

Should you have any queries regarding the contents of this circular, please contact Ms Kiki Wong on 2231 1569.

Intermediaries Supervision Department
Intermediaries Division
Securities and Futures Commission

Enclosure

End

SFO/IS/038/2017

Note 1 The other RAs are: the Hong Kong Monetary Authority, the Insurance Authority and the Customs and Excise Department.
Note 2 These FIs are: authorized institutions; licensed corporations (“LCs”); authorized insurers, appointed insurance agents and authorized insurance brokers carrying on or advising on long term business; and licensed money service operators.
Note 3
In relation to associated entities (“AEs”), please refer to paragraph 6 of the Prevention of Money Laundering and Terrorist Financing Guideline issued by the Securities and Futures Commission for Associated Entities (“AML Guideline for Associated Entities”) which provides that AEs that are not authorized financial institutions are expected to have regard to the provisions of the AML Guideline as if they were themselves LCs. 
Note 4 The Bill, which is being scrutinized by the Legislative Council, includes the proposal to amend the requirements in relation to wire transfers; so consequential amendments will also be made to Chapter 10 of the AML Guideline, including relevant address verification requirements.
Note 5 In relation to AEs, please refer to paragraph 9 of the AML Guideline for Associated Entities.
Note 6 For example, intermediaries should pay attention to paragraph 5.4 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct, a.k.a. the Client Identity Rule).


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Supplementary document:
Appendix


Page last updated : 11 Oct 2017