Hong Kong plans to expand control over capital flows and transactions by Chinese officials, according to a recent consultation paper on money laundering.
According to the newspaper, the Financial Services and Treasury Office are proposing to implement due diligence on “politically exposed people” from anywhere outside Hong Kong rather than outside the People’s Republic of China.
The Asian financial center wants to improve compliance with anti-money laundering regulations ahead of a series of evaluations in the coming years. The proposed amendments come as the ruling Chinese Communist Party takes an increasingly harsh stance on corruption among government cadres and corporate executives. More than 1.5 million government officials have been punished in China’s campaign for years.
Hong Kong financial institutions and designated companies and non-financial professions need to perform enhanced due diligence on foreign PEPs, as well as their close relatives and associates, due to the increased risks of money laundering and terrorist financing. . Current rules refer PEPs to people holding government positions in a foreign country.
As part of the proposals, Hong Kong is trying to tighten requirements for virtual asset trading operations and introduce a two-tier registration regime for trading transactions in precious asset-based instruments, according to the consultation paper.