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Frequently Asked Questions (AML Monitoring)


Q1. Does my practice need to appoint a money laundering reporting officer (MLRO) if (a) it does not have an intention to engage, by way of business, in work to prepare for or carry out specified transactions or (b)it is an own name practice with no staff?

The Drug Trafficking (Recovery of Proceeds) (Amendment) Ordinance; Organized and Serious Crimes (Amendment) Ordinance; and United Nations (Anti-Terrorism Measures) Ordinance all have requirements to report suspicious transactions, which apply to everybody in Hong Kong. Under the law, employees may disclose their knowledge or suspicion that certain activities may relate to money laundering and terrorist financing to a person designated to receive such reports by their employer. By making appropriate disclosures to the designated person, in accordance with procedures laid down by their employer, employees are regarded as having discharged their obligations under the law. As indicated in Sections 610 and 640 of the Guidelines on Anti-Money Laundering and Counter-Terrorist Financing for Professional Accountants (AML Guidelines), practices must appoint an MLRO as a central reference point for reporting suspicious transactions. Therefore, each practice should designate a person of sufficient seniority and authority within the practice as an MLRO in order to discharge its responsibilities. In case of a sole proprietorship or an own name practice, the sole proprietor or sole practitioner can be the MLRO but such designation should be communicated to all staff members, if any, in order to draw their awareness. (Posted on 16 January 2019)

 Q2. If a CPA firm conducts due diligence work or acts as a reporting accountant for a client in respect of a purchase or a sale of real estate or a business entity, would that constitute a specified transaction and require the relevant AML procedures to be carried out by the CPA firm?
 Ans. Paragraph 600.2.1 of the AML Guidelines provides that when practices, by way of business, prepare for or carry out for a client a transaction involving buying and selling of real estate (point (a) of the paragraph refers) or business entities (point (f) of the paragraph refers), specific AML procedures are required to be adopted. In the Institute's view, due diligence or reporting accountant work on a purchase or a sale of real estate or a business entity assists the client in preparing for those transactions, whether or not they are eventually completed. The nature of those engagements means that the CPA firm to be engaged for such work would normally be sufficiently involved to fall within the scope of paragraph 600.2.1 and hence the relevant AML procedures should apply. (Posted on 16 January 2019)