HKMA Revises CAR Return and Policy Module on Consumer Credit Data Use

Revised CAR Return. HKMA finalized the revised CAR return, together with the accompanying completion instructions. The revisions are mainly to cater to the authorized institutions’ reporting of equity investments in funds in accordance with the requirements introduced by the Banking (Capital) (Amendment) Rules 2022 that came into effect on July 01, 2022. Reporting institutions should submit the revised return based on the revised completion instructions to HKMA, via the Submission Through Electronic Transmission (STET) system, starting from the reporting position as of September 30, 2022.

Revised SPM Module IC-6. HKMA issued, by notice in the Gazette, the revised SPM module IC-6 as a statutory guideline under section 16(10) of the Banking Ordinance. The changes in the revised SPM module IC-6 are mainly to set out the expectation of HKMA for authorized institutions involved in the provision of consumer credit to participate as fully as possible in the sharing and use of consumer credit data through credit reference agencies in the “Multiple Credit Reference Agencies Model” via the Credit Reference Platform. The Credit Reference Platform will be operated by an independent operator as a data switch between participating credit providers and the credit reference agencies. The Credit Reference Platform is expected to be launched by the end of 2022. While the effective date (that is the date of commencement of the operation of the Credit Reference Platform) has not been specified in the revised SPM module, HKMA will inform authorized institutions of this date in due course.

ML/TF risk assessment report. The report provides an updated view of the ML/TF risk landscape with expanded sectoral assessments for some sectors (for example stored value facilities, virtual asset service providers) and a standalone assessment of Hong Kong’s proliferation financing risk. The report also sets out the key ML/TF risks for Hong Kong that have changed since the first assessment in 2018, and the actions taken to address these risks. The 2022 report specifies that the local banking sector continues to face a high level of risks of being exploited for money laundering, which is commensurate with Hong Kong’s status as an international financial center and in line with the risks noted internationally. The most prominent money laundering threats to banks continue to arise from fraud, corruption, and tax crimes. Major developments since 2018 have been emphasized in the 2022 report, including an accelerated rise in online commerce and financial services and widespread application of technology, especially during the COVID-19 pandemic, the launch of virtual banks and the Faster Payment System in Hong Kong, and the emergence of new payment methods and virtual assets. HKMA will continue to work closely with authorized institutions and other competent authorities to address the ML/TF risks in the banking sector. In the coming twelve months, HKMA will roll out further initiatives to support innovation and regtech adoption including the second Anti-Money Laundering Regtech Lab (AMLab) on a new theme, as well as further sharing of updated case studies and insights.

Keywords: Asia Pacific, Hong Kong, Banking, CAR Return, Capital Adequacy Ratio, Basel, BCAR, Supervisory Policy Manual, Credit Reference Agencies, Consumer Credit, Regtech, AML CFT, ML TF Risk, HKMA