CHENNAI: The Hong Kong Monetary Authority has imposed a penalty of HK$8.5 million (Rs 9.3 crore) on Indian Overseas Bank, Hong Kong branch (IOBHK) for contraventions of anti-money laundering and counter-terrorist financing ordinance (AMLO). It has pulled up the lender for “significant failure” to mitigate risks.Apart from IOB, the authority has levied penalties against the Bank of Communications (Hong Kong) and Bank of Communications Co. Hong Kong branch for HK$ 4 million and HK$ 3.7 million, respectively.A senior IOB official told TOI that there was no fraud or any anti-money laundering and counter-financing of terrorism violations. It pertains to issues over handling alerts generated by the software, which the bank is addressing by putting additional checks in place. “IOBHK has no history of disciplinary record regarding AMLO. It was only a matter of putting procedures in place,” the official said. The development follows an investigation by the HKMA, in which the authority has charged that IOBHK has contravened three specified provisions of AMLO between May 2021 and Jan 2024.“IOBHK’s management oversight of anti-money laundering and counter-financing of terrorism (AML/CFT) controls was inadequate. The senior management did not have a clear leadership role and responsibility over AML/CFT matters. They did not adequately discuss key AML/CFT control issues at relevant committee meetings and failed to appoint a competent person with sufficient AML/CFT knowledge as the Compliance Officer. As a result, the transaction alerts generated by IOBHK’s transaction monitoring system were not properly followed up,” the HKMA statement said.IOB in a statement to the exchange said “The bank and its branch operating at Hong Kong have taken necessary preventive actions to avoid such recurrence in future and further strengthen its internal processes in this regard. The impact of the said action on the bank is not material.”
