The Hong Kong Monetary Authority (HKMA) has concluded its investigation into WeChat Pay Hong Kong Limited (WPHK), resulting in a HK$875,000 penalty for violations under the Payment Systems and Stored Value Facilities Ordinance (PSSVFO). The penalty was imposed for WPHK’s failure to meet the required standards under section 6(2)(b) of Part 2 of Schedule 3 of the Ordinance, concerning anti-money laundering (AML) and counter-financing of terrorism (CFT) controls.
The disciplinary action follows a self-report from WPHK and an ensuing investigation by the HKMA, which uncovered lapses in WPHK’s compliance practices between August 25, 2016, and October 24, 2021. During this period, WPHK failed to conduct customer due diligence (CDD) and apply enhanced due diligence (EDD) measures, particularly in high-risk scenarios involving potential money laundering and terrorist financing risks.
The HKMA’s investigation revealed that WPHK did not properly categorise certain law enforcement agency intelligence as trigger events, which would have required further CDD reviews. As a result, the identification and management of high-risk customers were delayed, with some EDD measures being applied only after significant delays of up to 900 days.
In determining the penalty, the HKMA considered the severity of the compliance failures, the need to reinforce AML/CFT controls within the financial industry, and WPHK’s measures to address the deficiencies. The authority also noted WPHK’s cooperation throughout the investigation and its clean disciplinary record.
Raymond Chan, Executive Director of Enforcement and AML at the HKMA, stated “SVF licensees should apply enhanced due diligence measures on their customers in situations involving potentially high risk of money laundering and terrorist financing. These enhanced due diligence measures should be effective in ensuring that the associated money laundering and terrorist financing risks are properly managed.” highlighting the need of effective enhanced due diligence measures for Stored Value Facility (SVF) licensees to curb money laundering and terrorist financing risks.
(Source: https://www.hkma.gov.hk/media/eng/doc/key-information/press-release/2024/20240830e7a1.pdf, https://www.hkma.gov.hk/eng/news-and-media/press-releases/2024/08/20240830-7/#1)
