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The Hong Kong Monetary Authority (HKMA) has issued a public consultation paper on allowing financial institutions to share information on customer accounts to reduce financial crime.
There is a need for faster sharing of information to further support the advanced use of technology and analytics to detect and disrupt fraud and mule account networks and intercept illicit funds more effectively, the HKMA has said, as it proposes giving financial institutions new powers.
Fraud and money laundering have become an increasingly big problem for the Asian financial hub.
For example, 27,923 deception cases were reported to the Hong Kong Police Force in 2022, which is 45 percent more than in 2021 and more than three times the number in 2018.
Cases subsequently surged further in the first ten months of 2023 by 52.1 percent year-on-year to 33,923 cases, with estimated losses of about HK$7.2bn.
The HKMA also continued to receive increasing numbers of fraud-related banking complaints.
In 2023, the regulator received more than 1,200 cases, more than double the total of 555 cases for the whole of 2022.
The HKMA is now inviting stakeholders from the banking sector and members of the public to share their views on the proposal to facilitate information sharing among authorised institutions in the jurisdiction.
This includes legislative amendments to provide legal protection to authorised institutions and safeguards to protect data privacy and customer confidentiality.
Stakeholders have until March 29 to respond to the consultation, which delves into topics such as the information that should be shared and data safeguards.
Information sharing initiatives elsewhere
The proposed arrangements are in line with similar developments internationally.
The Monetary Authority of Singapore (MAS) is currently developing a platform called COSMIC, for example. Standing for "Collaborative Sharing of Money Laundering/Terrorism Financing (ML/TF) Information & Cases", the information sharing tool is being developed alongside six major commercial banks in Singapore, namely, DBS, OCBC, UOB, SCB, Citibank and HSBC.
Meanwhile, the EU’s proposed Payment Services Regulation (PSR) will enable payment service providers to exchange information about a customer with other payment service providers in circumstances where a firm has sufficient evidence to assume that a fraudulent payment transaction has occurred.
“Fraud and financial crime risks have surged globally. Criminals increasingly exploit information gaps between banks and abuse the financial systems to move and hide illicit funds,” said Eddie Yue, chief executive of the HKMA.
“Effective information sharing will help the banking sector, supervisors and law enforcement agencies turn the tables on fraud and financial crime and help protect consumers of financial services.”
