The Hong Kong Monetary Authority has imposed a pecuniary penalty of HK$4,000,000 on China CITIC Bank International Limited, citing material deficiencies in the bank's transaction monitoring systems and controls under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. The enforcement action, announced on 6 December 2024, was taken under Section 21(2)(c) of the Ordinance following a regulatory investigation into the bank's AML compliance programme.
China CITIC Bank International is the Hong Kong subsidiary of China CITIC Bank, part of CITIC Group, a mainland Chinese state-owned conglomerate. As an authorised institution in Hong Kong, the bank is subject to the HKMA's AML and counter-terrorist financing requirements, which are aligned with international standards set by the Financial Action Task Force.
TRANSACTION MONITORING FINDINGS
The HKMA's investigation identified two central shortcomings in China CITIC Bank International's compliance framework. The first was the incorrect implementation of detection rules and core model rules in the bank's automated transaction monitoring system, which resulted in fewer alerts being generated on suspicious transactions between November 2015 and July 2018.
The second failing was that the bank did not examine the background and purpose of some customers' transactions and set out its findings in writing during that period.
The HKMA also found that CITIC had breached section 19(3) of Schedule 2 to the Ordinance by failing to establish and maintain effective procedures, tracing the failures to the lack of maker-checker controls over system values and inadequate user acceptance testing.
REMEDIATION AND DETERRENCE In setting the penalty, the HKMA said it considered the seriousness of the findings, the need to send a clear deterrent message, the remedial actions CITIC had taken, and the bank's lack of any previous AML disciplinary record and its cooperation with the investigation.
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