The Hong Kong Monetary Authority (HKMA) has announced a disciplinary action against WeChat Pay Hong Kong Limited (WPHK) for violations under the Payment Systems and Stored Value Facilities Ordinance (PSSVFO). According to the HKMA, WPHK is required to pay a pecuniary penalty of HK$875,000 for failing to meet regulatory standards.

Details of the Violation

The HKMA’s investigation, which covered the period from August 25, 2016, to October 24, 2021, found that WPHK did not have adequate systems in place to comply with anti-money laundering (AML) and counter-financing of terrorism (CFT) guidelines. The identified deficiencies were primarily in two areas:

• Undertaking customer due diligence (CDD) reviews upon trigger events.
• Applying enhanced due diligence measures in high-risk situations to mitigate money laundering and terrorist financing risks.

Factors Considered in Disciplinary Action

The HKMA took several factors into account when deciding the disciplinary action:

• The seriousness of the investigation findings.
• The need to send a clear deterrent message to the industry regarding the importance of effective AML and CFT controls.
• Remedial measures taken by WPHK to address the deficiencies.
• WPHK’s self-reporting of the matter to the HKMA.
• WPHK’s lack of previous disciplinary records and its cooperation in resolving the identified issues.

Official Statements

Raymond Chan, Executive Director (Enforcement and AML) of the HKMA, emphasized the importance of SVF licensees applying enhanced due diligence measures in potentially high-risk situations. “These enhanced due diligence measures should be effective in ensuring that the associated money laundering and terrorist financing risks are properly managed,” Chan stated.

For further information, the official statement of disciplinary action can be accessed from the Hong Kong Monetary Authority.

Industry Implications

This disciplinary action serves as a significant reminder to all stored value facility (SVF) licensees in Hong Kong about the critical necessity of maintaining robust AML and CFT controls. The HKMA’s decision highlights the regulatory body’s commitment to ensuring financial systems’ integrity and sending a clear message on the consequences of non-compliance.

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