Hong Kong Imposes HK$6M Fine on Commerzbank AG for AML Lapses

The Hong Kong Monetary Authority (HKMA) has fined the Hong Kong branch of the German universal bank, Commerzbank AG a pecuniary penalty of HK$6 million (US$764,670). Take Advantage of the Biggest Financial Event in London. This year we have expanded to new verticals in Online Trading, Fintech, Digital Assets, Blockchain, and Payments. The fine is …


The Hong Kong Monetary Authority (HKMA) has fined the Hong Kong branch of the German universal bank, Commerzbank AG a pecuniary penalty of HK$6 million (US$764,670).

The fine is for breaking four provisions of
the country’s Anti-Money Laundering and Counter-Terrorist Financing Ordinance
(AMLO), which is embedded in Chapter 615 of the Laws of
Hong Kong.

The central banking
authority on Friday said it had issued the
penalty
following its
investigation and on-site examination of the German subsidiary bank’s systems
and controls.

HKMA said it found that
Commerzbank AG, the Hong Kong Branch (CBHK) did not establish customer duediligence (CDD) before entering business relationships with 17 customers
between April 2012 and June 2016.

In addition, the government authority noted that the bank delayed conducting the CDD on the customers for as
short as two months and as long as 46 months.

Moreover, it added that the bank failed to terminate its business relationship with 12 of the customers
when it discovered it could not comply with the rule but instead extended the
relationship for as long as six to 46 months.

“CBHK also failed to
establish and maintain effective procedures for carrying out its duties under
the AMLO in relation to conducting CDD and implementing name screening
mechanisms of customers’ beneficial owners during this period,” HKMA
explained.

‘Clear Deterrent
Message’

Meanwhile, HKMA
explained that Commerzbank AG’s failure meant that the bank could not determine whether a customer’s beneficiary owner was a
politically-exposed person.

However, HKMA pointed
out that the German-owned universal bank has taken ‘prompt remedial action’ to
address the lapses it discovered.

To come to the decision,
the apex bank said it considered “the need to send a clear deterrent message to
CBHK and the industry about the importance of effective controls and procedures
to address money laundering and terrorist financing risks.”

Furthermore, the monetary authority said it took into account the bank’s cooperation with its investigation
and enforcement proceedings as well as having no previous record of
contravening the AMLO.

“As the first line of
defence, carrying out CDD measures upon customer on-boarding is fundamental to
combating money laundering and terrorist financing and thereby maintaining the
integrity of the banking system of Hong Kong,” said Carmen Chu, the Executive
Director of Enforcement and AML at HKMA.

The Hong Kong Monetary Authority (HKMA) has fined the Hong Kong branch of the German universal bank, Commerzbank AG a pecuniary penalty of HK$6 million (US$764,670).

The fine is for breaking four provisions of
the country’s Anti-Money Laundering and Counter-Terrorist Financing Ordinance
(AMLO), which is embedded in Chapter 615 of the Laws of
Hong Kong.

The central banking
authority on Friday said it had issued the
penalty
following its
investigation and on-site examination of the German subsidiary bank’s systems
and controls.

HKMA said it found that
Commerzbank AG, the Hong Kong Branch (CBHK) did not establish customer duediligence (CDD) before entering business relationships with 17 customers
between April 2012 and June 2016.

In addition, the government authority noted that the bank delayed conducting the CDD on the customers for as
short as two months and as long as 46 months.

Moreover, it added that the bank failed to terminate its business relationship with 12 of the customers
when it discovered it could not comply with the rule but instead extended the
relationship for as long as six to 46 months.

“CBHK also failed to
establish and maintain effective procedures for carrying out its duties under
the AMLO in relation to conducting CDD and implementing name screening
mechanisms of customers’ beneficial owners during this period,” HKMA
explained.

‘Clear Deterrent
Message’

Meanwhile, HKMA
explained that Commerzbank AG’s failure meant that the bank could not determine whether a customer’s beneficiary owner was a
politically-exposed person.

However, HKMA pointed
out that the German-owned universal bank has taken ‘prompt remedial action’ to
address the lapses it discovered.

To come to the decision,
the apex bank said it considered “the need to send a clear deterrent message to
CBHK and the industry about the importance of effective controls and procedures
to address money laundering and terrorist financing risks.”

Furthermore, the monetary authority said it took into account the bank’s cooperation with its investigation
and enforcement proceedings as well as having no previous record of
contravening the AMLO.

“As the first line of
defence, carrying out CDD measures upon customer on-boarding is fundamental to
combating money laundering and terrorist financing and thereby maintaining the
integrity of the banking system of Hong Kong,” said Carmen Chu, the Executive
Director of Enforcement and AML at HKMA.



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