HK Banks Hit With HK$16M Penalties for AML System Lapses

The Hong Kong Monetary Authority (HKMA) has imposed HK$16.2 million fines on banks for their weak anti-money laundering (AML) systems.

Under the Anti Money Laundering (AML) and Counter Terrorist Financing (CTF) Ordinance (Cap. 615), commonly known as AMLO in Hong Kong, the HKMA has concluded an investigation on three banks, including Indian Overseas Bank, Hong Kong Branch (IOBHK), Bank of Communications Hong Kong Branch (BCOM Hong Kong Branch), and Bank of Communications (Hong Kong) Limited (BCOM(HK)).

These three banks have gaps in their procedures for ongoing monitoring of customer business relationships and anti‑money‑laundering (AML) systems. Particularly, BCOM(HK) breached section 5(1)(b) of Schedule 2 to the AMLO as it failed to monitor transactions of around 97,000 customers.

IOBHK has been identified to have “significant deficiencies” in its transaction monitoring system, which led to a heavy fine of HK$8.5 million for an insufficient AML system. In addition, the Monetary Authority (MA) has issued a public reprimand against IOBHK and ordered a comprehensive “look‑back” audit of its past transactions.

Separately, the Monetary Authority (MA) has fined BCOM(HK) and BCOM Hong Kong Branch with HK$4 million and HK$3.7 million, after concluding an investigation into whether these banks’ systems and controls comply with AMLO. Both banks failed to add certain transaction types in their shared monitoring system, which resulted in undetected suspicious activities.

In deciding the penalties, the HKMA has weighed the seriousness of the breaches and the need to send a strong warning to the industry, but also has taken into account that all three banks had clean compliance records and fully cooperated during the investigations.

HKMA’s Executive Director Raymond Chan stated: “Effective transaction monitoring enables timely identification and reporting of suspicious transactions… any identified deficiencies must be addressed promptly”.

This message is a clear warning for financial sectors across Hong Kong to not compromise with their compliance measures. By penalizing three banks, HKMA isn’t just punishing past negligence but signaling a zero‑tolerance posture on AML/CFT readiness.

This substantial enforcement action serves as a clear reminder to every licensed financial institution in the territory to strengthen its compliance or face regulatory consequences.

The HKMA’s actions underscore the need for robust, real-time transaction monitoring and proactive risk management measures.

AML Watcher’s solutions help financial institutions implement real-time transaction monitoring and ongoing screening that flags risks the moment they arise, eliminating blind spots and costly back-look audits. The platform automates compliance across large customer volumes while maintaining a complete audit trail of all screening and decision-making processes, ensuring your institution remains audit-ready and aligned with regulatory expectations.

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