MSO useful tips: Frauds and Scams
You may have already noticed the recent series of fraud and scam cases. Many of them involved money service operators, for example:
- Fake notes – There was a Mainlander trying to exchange 100 fake US100 notes into HK dollars at a money changer in Sheung Wan on 9 March 2013. The money changer called the Police and the man was arrested. (News source: http://orientaldaily.on.cc/cnt/news/20130310/00176_032.html)
- Suspected fake ID documents and scam – According to internal news, recently a foreigner tried to use fake ID and other documents to carry out a scam. He went to a money changer and request to remit money. The money changer refused and reported the case to the HK Police.
- Telephone scam – A Mainlander was sentenced to 10 and 1/2 years jail term for laundering $13.1 billion in March this year. The case was triggered by a Taiwan telephone scam case.
Such fraud and scam cases not only may bring financial losses to MSOs. They could trigger serious consequence:
- If a MSO fails to report a suspicious customer or transaction within reasonable time, the maximum penalty is 3 months imprisonment and a fine of $50,000. (s.7.1 of AML guideline)
- A MSO involving in such cases may be subject to the HK Police’s or Custom’s investigation. If the MSO failed to comply with the Due Diligence and Record Keeping requirements of the AMLO, the maximum penalty is 7 years imprisonment and a fine of $1,000,000. (s.5 and s.21 of AMLO)
- If the MSO fails to provide the relevant customer’s or fund source information, he may be considered as assisting in Money Laundering, and the maximum penalty is 14 years imprisonment and a fine of $5,000,000. (s.1.22 and 1.23 of AML guideline)
In order to protect oneself from fraud and scam cases, MSOs must straightly comply with the Due Diligence requirements under Sch.2 of the AMLO. The money changers in case 1 and 2 were able to detect the suspicious customers and transactions because they are closely complying with the Due Diligence requirements and reported the cases to the HK Police. They have not only protected themselves, but to assist the Police to prevent more victims falling into the scams. As such, we would like to remind all MSOs to straightly comply with the Due Diligence and Record Keeping requirements under the AMLO, in order to protect your financial and legal interests.
We, Inno Consultants, provide professional consultancy and training services in relation to AMLO. These include: teaching frontline staff to obtain all required documents easily, assisting CO and MLRO achieve their legal obligations with ease, assisting MSO licensee to manage his/her business information through a computerized system, and achieving the HK Custom’s requirements easily and automatically.
If you have any questions about the laws or the above contents, or encounter any difficulty in implementing the requirements of the laws, please feel free to contact us by email at This email address is being protected from spambots. You need JavaScript enabled to view it. or telephone at 3563 8766.