I85PREP
⌘ K
HKIB ECF-AML/CFT Core study materials
HKIB ECF-AML/CFT Core study resources

HKIB ECF-AML/CFT Core: Anti-Money Laundering and Counter-Financing of Terrorism (Core Level)

HKIB ECF-AML/CFT Core · Work through your exam, one topic at a time.

All guide sections

Anti-Money Laundering and Counter-Financing of Terrorism (Core Level)

This domain is the Core Level of the HKIB ECF for AML/CFT. It tests whether you can explain Hong Kong’s legal and supervisory framework, apply risk-based customer due diligence (CDD), identify beneficial owners and politically exposed persons (PEPs), monitor relationships, and escalate suspicious activity to the Joint Financial Intelligence Unit (JFIU). Questions use defined terms from the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) and the HKMA guideline, often in short scenarios.

Framework

  • AMLO (Cap. 615) is the primary statute for financial institutions; Schedule 2 sets CDD and record-keeping requirements. It sits with DTROP (Cap. 405), OSCO (Cap. 455) and UNATMO (Cap. 575).
  • The HKMA’s AML/CFT Guideline for authorized institutions applies the FATF risk-based approach (RBA); sector regulators issue equivalent guidance.
  • STRs go to the JFIU. Tipping-off is a criminal offence.
  • UN sanctions and terrorist property require freezing and reporting, separate from an STR.

Core rules

  • ML stages: placement, layering, integration. TF may use small or clean funds and focuses on intended use, not proceeds.
  • RBA: assess and mitigate; enhanced due diligence (EDD) for higher risk. Simplified due diligence is not allowed where suspicion exists, for PEPs, or in high-risk cases.
  • CDD: identify and verify the customer; identify the beneficial owner and take reasonable measures to verify; understand purpose and intended nature; conduct ongoing monitoring.
  • Beneficial owner: an individual who ultimately owns or controls 25% or more of shares/voting rights, or otherwise exercises control, or on whose behalf a transaction is conducted.
  • PEP: prominent public function, plus family members and close associates; requires senior management approval, source of wealth and source of funds, and enhanced monitoring.
  • Keep CDD and transaction records for five years after the relationship ends or the occasional transaction is completed.

Worked example

A Hong Kong company seeks an account. Its sole shareholder is a BVI company, which is wholly owned by Ms Chan; she is also sole director and signatory. The customer is the HK company, but Ms Chan is the beneficial owner because she ultimately owns 100% through the BVI layer. The RM cannot stop at the corporate shareholder. Given a stated US$5 million monthly turnover that is unusual for a new electronics trader, the RM should obtain ownership and business evidence, verify source of funds and wealth, and apply EDD. If Ms Chan is a PEP, senior management approval is mandatory. If explanations conflict, do not open; escalate and consider an STR without telling the customer.

Traps that cost marks

Treating the company as the only customer; granting simplified measures to a PEP; waiting for proof before reporting; tipping off; retaining records from account opening rather than relationship end; assuming sanctions screening replaces STR.