Management Summary
- Purpose / Background: To balance AML/CFT risk management with the principle of financial inclusion. The HKMA aims to ensure that individuals assessed as "higher-risk" (e.g., those under investigation or prosecution) still have access to basic banking services in Hong Kong, rather than being subject to blanket service denials.
- One-line conclusion: AIs must move away from "one-size-fits-all" de-risking and instead implement case-by-case risk-based measures that allow for the provision of basic banking services to higher-risk residents.
- Key Changes:
- Explicit shift from blanket exclusion to a risk-based "appropriate safeguards" approach.
- Requirement to distinguish between individuals with prior convictions vs. those currently under investigation.
- Expectation to provide tailored, limited service arrangements rather than full service termination where possible.
- Mandate for clear customer communication regarding service limitations and the rationale for risk-based controls.
- Requirement to review and update internal policies to reflect these financial inclusion expectations.
- Key Dates / Deadlines: Effective immediately (27 May 2026). AIs are expected to review and revise policies as soon as practicable.
- Applicability / Impact scope: All Authorized Institutions (AIs), with a primary focus on those providing retail banking services to individual customers.
- Recommended management actions:
- Conduct a gap analysis of current customer exit/service-restriction policies against the new guidance.
- Implement a structured, case-by-case assessment framework for higher-risk individuals.
- Define "Basic Banking Services" and the corresponding "safe-guarding" thresholds for this cohort.
- Train front-line and compliance staff on the shift from blanket de-risking to risk-mitigated service provision.
- Establish clear documentation standards for the rationale behind any service refusal or limitation.
Detailed Summary
1) Document overview
This circular provides formal guidance to AIs regarding the management of banking services for individuals assessed as higher-risk. It emphasizes that while AIs must mitigate AML/CFT risks, they must also support financial inclusion for individuals who have genuine banking needs, particularly those residing in Hong Kong who are under investigation but not yet convicted.
2) Main requirements
- Risk-Based Approach: AIs must avoid "one-size-fits-all" approaches to risk management.
- Case-by-Case Assessment: Decisions to restrict services must be based on individual risk assessments, not merely on a higher-risk classification.
- Tailored Services: For higher-risk residents with legitimate needs, AIs are encouraged to offer "basic banking services" coupled with specific limitations or safeguards commensurate to the assessed risk.
- Communication: AIs must communicate clearly with affected customers about the nature of the services provided and why specific limitations are applied.
3) Key changes
- Formal movement towards an explicit mandate to support financial inclusion for the accused/investigated population.
- Transition from presumptive service termination to the implementation of "service arrangements" that balance risk mitigation with access.
4) Important dates & transition
- The guidance is effective as of the date of the circular (27 May 2026). AIs are expected to integrate this guidance into their existing AML/CFT compliance frameworks without delay.
5) Impact and risks
- Compliance: Need to update AML/CFT policies and procedures to ensure alignment.
- Operations: Potential increase in operational effort to perform more granular, case-by-case reviews of higher-risk accounts.
- Reputational: Proper implementation reduces the risk of "de-risking" that may negatively affect public perception and financial inclusion goals.
6) Compliance action checklist
- [ ] Review current internal policy for managing "higher-risk" individual customers.
- [ ] Identify if current policies use "blanket" exclusion triggers.
- [ ] Draft internal guidelines for applying "basic banking" service arrangements.
- [ ] Update staff training modules to reflect the balance between risk mitigation and financial inclusion.
- [ ] Establish a review panel or process for challenging/verifying high-risk case decisions.
7) Appendices/attachments summary
- Annex (Guidance on Banking Services): Contains the specific practical guidance on implementing service arrangements and safeguarding measures for higher-risk individuals. It details how AIs should calibrate their risk-based approach to ensure that financial inclusion remains a core consideration while maintaining strict AML/CFT compliance.