Hong Kong hits AIA with record fine for anti-laundering lapses

AIA Group was subject to a record fine of HK$23 million (S$3.92 million) by the Insurance Authority for anti-money laundering oversight, as the city’s regulators step up scrutiny of the industry. 

An on-site inspection by the regulator found “technical issues” with AIA’s anti-money laundering system and associated algorithm, the Insurance Authority said in an e-mailed statement on Friday (Aug 2).

The inspection was related to business between the period of March 2016 and October 2022, it said.

The lapses resulted in some customers who were “politically exposed persons” failing to be picked up during the screening process. That led to delays in identifying their source of money and wealth, it added. However, no policies were sold to clients who should not have been onboarded, the regulator said. 

The city’s regulators have escalated inspections over the industry amid a business boom bolstered by mainland customers. Hong Kong’s Insurance Authority raided the offices of a licensed insurance broker and a referral company, regulators said in April. The broker was suspected of using unlicensed referrers to help advise and sell policies to mainland Chinese.

AIA’s shares fell about 2.5 per cent on Friday in Hong Kong, in line with the Hang Seng Index.

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A politically exposed person is an individual who holds or held prominent positions that can be abused for the purpose of laundering illicit funds or other predicate offences such as corruption or bribery, according to the definitions by the Financial Action Task Force. 

AIA’s Hong Kong unit also failed to subject certain clients flagged by the system as “high risk” to “enhanced due diligence in a timely manner,” the regulator said. 

AIA was collaborative during the process. Authorities have ordered the company to submit a report prepared by an independent adviser tallying the “ongoing effectiveness” of remedial actions. BLOOMBERG