Hong Kong Invites Public Consultation on Information Sharing Proposal to Combat Financial Crimes
January 25, 2024
The Hong Kong Monetary Authority (HKMA) has issued a consultation paper, inviting public opinions on its proposal to enable Authorized Institutions (AI) to exchange customer account information. Sharing information among authorized institutions aims to detect and combat financial crimes.
HKMA is seeking feedback from the banking sector and the public on its proposal to enable AI-to-AI information exchange. This includes legislative amendments to provide legal protection for AIs and implement measures to ensure data privacy and customer confidentiality. HKMA has proposed this initiative in line with comparable advancements, seen in global financial hubs.
Talking about the information-sharing practice to combat financial crimes, Mr. Eddie Yue, Chief Executive HKMA reportedly stated,
Fraud and financial crime risks have surged globally. Criminals increasingly exploit information gaps between banks and abuse the financial systems to move and hide illicit funds. Effective information sharing will help the banking sector, supervisors and law enforcement agencies turn the tables on fraud and financial crime and help protect consumers of financial services.
There is a prevalent increase in financial crimes particularly digital fraud across the world and this trend is evident in Hong Kong as well. Apart from the harm suffered by the victims, widespread digital fraud has the potential to shake public confidence in evolving digital financial services.
Hong Kong has reportedly achieved successful outcomes in public-private information-sharing collaboration, however continuous exploitation of financial systems to transfer illicit funds by criminals poses a threat.
Information Sharing Practice Around the World
Efficient information sharing is crucial to enhance the sophisticated use of technology and analytics to detect and prevent fraud & money mule networks, as well as to obstruct the movement of illicit funds.
Countries around the globe are practicing information-sharing approaches to enhance collaboration and prevent financial crimes. In July 2023, the UAE Central Bank and Dubai Police signed a preliminary agreement to strengthen coordination in different areas like information sharing about financial crimes and suspicious activities to uncover complex money laundering schemes and carefully evaluate suspicious financial activities.
In the context of collaborative efforts between the Central Bank and Dubai Police, Khaled Balama, governor of the UAE Central Bank reportedly said,
This pact is significant to achieve our common goals by exchanging supervisory information to strengthen the national efforts in fighting financial crimes, enhancing financial stability and supporting the country’s financial and economic system.
Regulatory bodies in the UK also promote the information-sharing practice for efficiently addressing financial crimes. The UK Economic Crime and Corporate Transparency Act to tackle fraud, and corruption, and strengthen legitimate business practices received Royal Assent in October 2023. One aspect of the law is to enable data sharing between the public and private sectors to combat organized crimes that are seeking to exploit the UK’s open economy.
Authorities in Singapore also taking active measures to deal with these ever-evolving challenges posed by illicit actors. In May 2023, the Monetary Authority in Singapore (MAS) announced the approval of the ‘Financial Services and Market Bill’ by the parliament. This bill establishes a regulatory structure for MAS’ secure information-sharing platform, set to launch in the second half of 2024.
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