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during 2015 accounted for 1.21 percent of the total.
“CPAs need to get more regular training on financial
crime risks and a clear communication of their roles
and responsibilities,” says Lam at Kroll.
Some CPAs also have reser vations about the
application of the proposals. “We acknowledge the
responsibility and expectations of a professional
accountant to take part in the anti-money laundering
and counter-terrorist financing processes,” says
Patrick Sze, Managing Par tner of Zhonghui Anda
CPA and an Institute member.
Despite that, he adds, obstacles can emerge.
“There are cer tain practical difficulties, such as if the
potential client is not willing to cooperate, it is ver y
difficult for a CPA to apply enhanced customer due
diligence measures,” Sze points out.
Lam, however, says CPAs could well be in a
better position to identify money laundering risks
than financial institutions. “Since these profession-
als are involved in the specified transactions, they
would have better understanding of the transactions’
nature,” he says.
The gover nment acknowledges that due diligence
can be difficult, expensive and time-consuming
but says technology could help. “There are already
exciting advances,” says James Lau, Under Secre-
tary for Financial Services and the Treasury, citing
technological developments that facilitate customer
verification and other safeguards.
Blockchain, a secure transaction database, could
power “solid ‘k now your customer’ and anti-money
laundering systems,” he says, by including not only
traditional identity infor mation but also biometric
data and records verified by third parties such as
universities, governments, employers and banks.
Hong Kong’s proposals are being considered just
as the U.S. banking industry is seeking an overhaul
of r ules combating money laundering and terror-
ism financing. The global financial community is
cur rently examining the ramifications of a report
describing U.S. regulations aimed at preventing
money laundering and ter rorism financing as
anachronistic and inefficient.
The repor t, A New Paradigm: Redesigning the U.S .
AML/CFT Framework to Protect National Security
and Aid Law Enforcement, issued on 16 Febr uar y
by The Clearing House, an influential U.S. banking
advocacy group, proposes a system under which banks
repor t only on transactions that ref lect law enforcement
priorities, rather than every suspicious transaction.
Such a change would “lessen the burden” on banks, the
report argues, tapping into the anti-regulation fervour
of President Donald Trump’s administration.
“The effectiveness of CPAs
in identifying a high-risk
customer is directly linked
to their awareness of
financial crime risks and
their reporting obligations.”
February 2017 29
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