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    HKMA Sets Out Good Practices to Manage Fraud and ML Risks

    June 28, 2022

    The Hong Kong Monetary Authority (HKMA) published the twentieth issue of the Complaints Watch newsletter, which discusses complaints on business partnerships with online personal financial service platforms and good practices on fraud prevention in loan application processes.

    In the newsletter, HKMA highlights good practices to manage fraud and money laundering risks and proposes that authorized institutions should:

    • identify and verify the applicant’s identity, and corroborate documents, data, or information provided by other independent sources, such as credit reference agencies.
    • identify red flags and reach out to the applicant through different channels to confirm receipt of the loan application.
    • obtain the applicant’s clear acknowledgement of the purpose of the verification, confirm details of the submitted loan application, and verify the authenticity of supporting documents.
    • deposit the approved loan proceeds into the applicant's designated account under the same name.
    • implement additional fraud rules to detect excessive applications from single mobile number/IP address and income anomalies.
    • immediately report any suspected fraud and criminal activities to law enforcement agencies for appropriate follow-up actions and to cooperate and extend full assistance to law enforcement agency investigations.
    • work together with HKMA and the  law enforcement agencies to collectively promote consumer education through different channels to enhance public awareness of fraud prevention and the importance of protecting personal information as well as integrity of bank accounts.


    Keywords: Asia Pacific, Hong Kong, Banking, Lending, Digital Banking, Complaint Handling, Fraud Prevention, ML TF Risk, Credit Risk, Operational Risk, Basel, HKMA

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