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Hong Kong has played a leading role in the formulation and promotion of global measures to combat money laundering and terrorist financing in the past year when it took up the presidency of the Financial Action Task Force on Money Laundering (FATF), the Commissioner for Narcotics, Mrs Clarie Lo, said today (August 21).

Mrs Lo, as the coordinator of Hong Kong's anti-drug and anti-money laundering policies, assumed the role of FATF President from July 2001 to June 2002.

In addition to the significant progress that has been made in combating terrorist financing and in the work on non-cooperative countries and territories, an important area of the FATF's work under Hong Kong's Presidency has been a review of the FATF Forty Recommendations - the leading international standard against money laundering.

First developed in 1990, the Recommendations provide a complete set of counter-measures against money laundering covering the criminal justice system and law enforcement, the financial system and its regulations, and international co-operation.

Since the Recommendations were last revised in 1996, money laundering methods and techniques have changed, new technologies have developed and there have been a number of international developments in the fight against money laundering.

Mrs Lo said: "Against this background, the FAFT decided last year to comprehensively review the Forty Recommendations with a view to ensuring its capabilities to cope with the changes."

The FATF then published the public consultation paper in late May 2002 outlining a number of areas in which possible changes could be made to the Forty Recommendations and providing options for dealing with the risks or proposals raised. The consultation paper covers three main areas:

- Customer identification and due diligence, suspicious transaction reporting, regulation and supervision.

- Information on the beneficial owners and controllers of corporate vehicles e.g. companies, trusts, foundations, with particular attention to bearer shares and trusts.

- The FATF is considering the possibility of extending the Forty Recommendations to seven categories of non-financial businesses and professions: casinos and other gambling businesses; dealers in real estate and high value items; company and trust service providers; lawyers; notaries; accounting professional and investment advisors.

Prior to the publication of the consultation paper, the Government has obtained preliminary views from financial regulators, including the Hong Kong Monetary Authority, the Hong Kong Securities and Futures Commission, and the Office of the Commissioner of Insurance, and other professional associations.

Professional associations that have been consulted included the Hong Kong Society of Accountants, the Estate Agents Authority, the Hong Kong Trustees Association, the Hong Kong Institute of Company Secretaries, the Hong Kong Bar Association and the Law Society of Hong Kong. The Hong Kong Jockey Club was also involved.

Mrs Lo pointed out that the review process has been open and transparent, with FATF members and observers, non-FATF countries, international organisations and the private sector all having an opportunity to contribute to and participate in the consultation process.

Since the publication of the consultation paper, the Government has written to financial regulators and professional associations inviting them to continue to actively participate in the review process and to urge their members to do the same.

The Commissioner for Narcotics urged the private sector to present their views.

Following the receipt of written submissions, the FATF will hold a forum in Paris on 8 October 2002, before its October Plenary meeting, to discuss issues raised in the consultation paper with representatives of the public and private sectors and other experts.

The whole review process is expected to complete in the first half of next year (2003).

Mrs Lo said: "The Government will continue to work closely with international organisations and individual governments on multilateral and bilateral fronts to fight against money laundering and terrorist financing beyond Hong Kong's FATF presidency."

"Active participation by the private sector during this important review of the Forty Recommendations is one way Hong Kong can demonstrate a firm commitment to the global effort against money laundering and terrorist financing," she added.

The consultation paper is obtainable from the FATF website at www.fatf-gafi.org/40RecsReview_en.htm. Interested parties should submit written comments to the FATF Secretariat via e-mail (contact@fatf-gafi.org) by 31 August 2002. The Government also wishes the local private organisations to copy their comments to the Narcotics Division of the Security Bureau (sbenq@sb.gcn.gov.hk).

End/Wednesday, August 21, 2002.

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