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Risk-based Supervisory Programme of AML / CTF Compliance

Background

 

The Institute is the regulatory body for accounting professionals, which are defined in the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) as certified public accountants (CPAs) and practice units, concerning anti-money laundering and counter-terrorist financing (AML / CTF) compliance. The Institute’s Guidelines on AML / CTF for Professional Accountants (Chapter F of the Code of Ethics for Professional Accountants (Code of Ethics)) (AML Guidelines) has been effective since 1 March 2018.

 

In October 2018, the Institute launched an AML / CTF Compliance Monitoring Review (ACMR) programme within its practice review programme to monitor the level of compliance of the Institute’s practice units with the AML Guidelines.

 

As announced in Financial Reporting, Auditing and Ethics Alert (Issue 34), the Institute has plans to enhance the risk-based supervision of accounting professionals concerning AML / CTF compliance to address the AMLO requirements and the recommendations of the Financial Action Task Force (FATF) in its mutual evaluation report on Hong Kong. Please read the alert for more details.

 

This page summarizes important information on the development of the Institute’s risk-based supervisory programme and provides resources and references to assist members and practice units in complying with the AML / CTF requirements.

 



ACMRs

 

Currently, only practice units are subject to an ACMR. The scope of an ACMR includes obtaining an understanding of a practice unit’s relevant AML / CTF policies and procedures and inspecting documentary evidence to assess level of compliance with the AML Guidelines and relevant laws and regulations.

 

There are two types of ACMR, namely a full-scope ACMR and a desktop ACMR. Practice units that have prepared or carried out for clients transactions specified in Paragraphs 600.2.1 and 600.2.2 of the AML Guidelines (Specified Transactions) will be subject to a full scope ACMR. Other active practice units will be subject to a desktop ACMR.

 

In order to make best use of resources and to cause less disturbance to practices, ACMRs have been conducted within every full scope and desktop practice review carried out on practice units with audit and assurance clients since October 2018 and April 2019, respectively.

Separate ACMRs are arranged for practice units without audit and assurance clients. Full scope separate ACMRs are carried out on site whereas desktop separate ACMRs take place in the Institute’s office. Separate ACMRs are carried out normally on a six-year review cycle basis. The frequency of separate ACMRs on these practice units will be shortened if a large proportion of their activities involve Specified Transactions.

 

Please read Quality Assurance Department reports for further information including key review findings from ACMRs:

 

 


 

Chapter G of Code of Ethics

 

As part of the plan to enhance risk-based supervision of AML / CTF compliance, the Institute published the exposure draft of Chapter G of the Code of Ethics (Professional Ethics to Relevant Anti-money Laundering and Counter-terrorist Financing Compliance for Accounting Professionals) in July 2020 and invited members to provide comments on the exposure draft. The consultation period ended on 20 October 2020, and the Institute received 19 written comments from 17 members and organizations.

 

Below is a webcast introducing Chapter G of the Code of Ethics:

 

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Exposure Draft of Code of Ethics Chapter G

 

 

 

 

If you cannot view the video above, please click here. arrow right

 

 

 

The Institute is reviewing the written comments received and will communicate consultation conclusion with members in due course.

 


 

AML Questionnaire

 

Risk assessment is the starting point to enhance risk-based supervision. To enable the Institute to collect sufficient relevant information from members and practice units to assess risks at the sectoral and the institutional levels in order to enhance the supervisory plan, the Institute launched a Questionnaire on AML / CTF Compliance of Accounting Professionals (AML Questionnaire) in November 2020. The AML Questionnaire was closed on 28 December 2020. The Institute is analysing the responses.

 


 

Resources

 

  • The Institute

o   Anti-money laundering web page

o   Frequently asked questions on Practice Review - AML Monitoring

o   Guidelines on Anti-Money Laundering and Counter-Terrorist Financing for Professional Accountants (Chapter F of Code of Ethics)

 

  •  FATF

o  Guidance for a Risk-based Approach for the Accounting Profession

o   Mutual Evaluation Report of Hong Kong, China 2019

 

  • Others

o  ICAEW firm-wide risk assessment methodology

IFAC Anti-Money Laundering: The Basics

 

Last update: 23 February 2021

 

 

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