The Hong Kong central bank today penalised State Bank of India's Hong Kong branch USD 1 million (Hong Kong dollar 7.5 million) for alleged violation of local anti-money laundering and counter-terror financing laws.
In its first action since the Hong Kong's Anti Money- Laundering Ordinance came into force in 2012, the Hong Kong Monetary Authority (HKMA) said the SBI branch between April 2012 and November 2013 failed to carry out customer due diligence before establishing business relationships.
The branch also failed to monitor business relationships with its customers and verify whether its customers were politically exposed persons, the HKMA said in a statement.
The HKMA "reprimanded" SBI's Hong Kong branch for the contraventions and ordered it to submit a report by an independent external advisor on sufficiency of remedial plan and effectiveness of its implementation. This is the first action by the HKMA under Hong Kong's Anti Money-Laundering Ordinance, which came into force in 2012.
Meena Datwani, Director-General (Enforcement) of the HKMA, said, "This was a case of internal control failures" relating to anti-money laundering and counter-terrorist financing (AML/CFT) rules. "The HKMA takes such failures seriously and wants to send a clear message to the industry that all authorised institutions should have effective AML/CFT systems," she said.
While SBI Hong Kong (SBIHK) said, "As a member of the Hong Kong banking community for over 35 years, SBIHK is committed to a policy of zero tolerance of non-compliance with regulatory guidelines supported by a robust compliance and risk function, while providing the products and services to our esteemed customers.
We fully support the HKMA's efforts to ensure high standards of due diligence and monitoring among Hong Kongs financial institutions.
" It said neither the HKMA nor the external consultants found any instances of problem accounts or suspicious transactions during the period in question, or the years following."
"As noted by the HKMA, we have undertaken very positive and intensive remediation work to address their findings, which refer to procedures and policies in place during 2012 and 2013," it said in an emailed statement.