The Hong Kong Monetary Authority has rebuked and fined JPMorgan Chase Bank, National Association, Hong Kong Branch for AML and CTF infringements.
JP Morgan has been fined a pecuniary penalty of HK$12.5m ($1.5m) for failing to establish and maintain sufficient procedures to identify and handle wire transfers which do not comply with customer due diligence.
Following this, the bank has been ordered to provide the authority with a report prepared by an independent external advisor which assesses if remedial measures have been taken and the deficiencies have been solved.
An investigation was launched by the authority which found that between April 2012 and February 2014, JPMorgan Hong Kong breached six specified provisions of AML and CTF.
The issue was that JPMorgan’s CDD procedures for certain customers did not require ‘certificates of incumbency or comparable documents to be obtained to verify their existence, and the identities of beneficial owners to be verified.’
In regard to continuous monitoring of business relationships, the bank’s procedures did not require a periodic review on a customer’s CDD information if a review had already been conducted by another customer in the same group. This led to 259 customers, of 495 high-risk customers, not being subject to annual review.
Its final failure was conducting a number of wire transfers without including the originator’s name in the message or payment.
In decided the disciplinary action, the authority accounted for the seriousness of the findings, the need to send a clear message to JPMorgan Hong Kong. The HKMA acknowledged that the bank had taken positive and extensive remediation work in respect of the failures when it became aware of the failures, and also that this was JPMorgan Hong Kong’s first offence with the HKMA.
HKMA executive director Carmen Chu said, “This case involved deficiencies across a number of key control areas including CDD, periodic reviews and wire transfers, stemming largely from ineffective procedures and resulting in multiple contraventions of specified provisions of the AMLO.
“A bank must have procedures that are effective for the purpose of carrying out its duties under the AMLO. Such procedures are essential to enable a bank to identify, understand and mitigate the risks to which it is exposed taking into account the nature, size and complexity of its business.”
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