Hong Kong plans to expand investigation into capital flows and transactions by Chinese officials, according to a recent report money laundering consultation document.
According to the newspaper, the Financial Services and the Treasury Bureau propose to institute increased due diligence on ‘politically exposed persons’ from all over Hong Kong instead of 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 assessments in the next few years. The proposed changes come as the ruling Chinese Communist Party takes an increasing stance on corruption among government cadres and corporate executives. More than 1.5 million government officials have been punished in China’s years-long campaign.
Financial institutions in Hong Kong and designated non-financial corporations and professions need to conduct a better due diligence on foreign PEPs, as well as their relatives and close partners due to the higher risks of money laundering and terrorist financing. The current rules refer PEPs to individuals fulfilling government roles of a foreign country.
As part of the proposals, Hong Kong seeks to tighten the requirements for virtual assets trading operations and set up a two-tier registration system for business transactions in instruments based on valuable assets, according to the consultation document.