CUSTOMS AND EXCISE
DEPARTMENT

Disciplinary Action Guideline
on Imposition of Pecuniary Penalty
Published under section 45(1), in Part 5, of the Anti-Money
Laundering and Counter-Terrorist Financing Ordinance,Chapter 615

April 2018

Disciplinary Action Guideline on Imposition of Pecuniary Penalty
Introduction
1. Under section 43 of the Anti-Money Laundering andCounter-Terrorist Financing Ordinance Chapter 615 (“AMLO”), theCommissioner of Customs and Excise (“CCE”) may, amongst otherdisciplinary actions, impose a pecuniary penalty on a person licensed
to operate a money service (“the licensee”), if the licensee
contravenes(a) any regulation made under section 51 of the AMLO;(b) any of the conditions of the licensee’s licence; or(c) sections 35(1), 36(1), 37(1), 38(1), 39(1), 39A(1), 40(1), or
41(1) of the AMLO.
2. Section 45(1) of the AMLO requires the CCE to publish guidelines toindicate the manner in which he proposes to exercise the power toimpose a pecuniary penalty under section 43(2)(c), and section 45(2)requires the CCE to have regard to such guidelines in exercising suchpower.
3. This Guideline is published under section 45(1) of the AMLO toindicate the manner in which the CCE will exercise the power
conferred by section 43(2)(c). The CCE will have regard to thisGuideline when exercising the power conferred by section 43(2)(c) ofthe AMLO.
4. As a matter of policy, the CCE will usually publicise all his decisions
to impose pecuniary penalty.
Factors to be considered by CCE when proposing to exercise thepower
5. When proposing to exercise the power to impose a pecuniary penalty
and the amount, the CCE will consider all of the circumstances of theparticular case, as well as any of the factors set out below that arerelevant.

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6. Any pecuniary penalty imposed by the CCE is intended to act as adeterrent to the licensee concerned and to act as a general deterrent toother licensees.
7. A pecuniary penalty should not have the likely effect of putting thelicensee concerned in financial jeopardy. In considering this factor,
the CCE will take into account the size and financial resources of thelicensee.
8. The more serious the contravention, the greater the likelihood that theCCE will impose a pecuniary penalty and that the amount of thepenalty will reflect the gravity of the contravention.
9. In determining the seriousness of a contravention, the CCE willconsider all of the circumstances of the case and take into account thefactors set out below that are relevant. The factors listed below are
not exhaustive. Some of them may not be applicable in a particularcase and there may be other factors which are relevant but are notlisted below.
(a) The nature, seriousness and impact of the contravention, including:
(i)

(ii)
(iii)

(iv)

(v)

(vi)

whether the contravention is intentional or results fromrecklessness or negligence - a contravention resulting fromnegligence or conduct which only results in a technical breachis generally regarded as less serious;
the duration and frequency of the contraventions;
whether the contravention is potentially damaging or
detrimental to the integrity of the operation of money services
in Hong Kong or the reputation of Hong Kong as aninternational financial centre;
whether the contravention caused or had the potential to cause
loss to, or imposed or had the potential to impose costs on, anyother person;
whether the contravention was committed by the licensee alone
or by him as part of a group and the role played by the licensee
in that group;
whether the contravention reveals serious or systemic2

weaknesses in the management system or internal controls in
respect of the customer due diligence and record-keeping
procedures relating to all or part of a licensee’s business;(vii) whether the contravention was indicative of a pattern resulting
in contraventions;(viii) whether there are a number of smaller issues, which
individually may not justify a pecuniary penalty, but which doso when taken collectively; and(ix) the nature and extent of any financial crime facilitated,occasioned or otherwise attributable to the contravention.
(b) The conduct of the licensee after the contravention, including:
(i)
(ii)

(iii)

(iv)

whether the licensee attempted to conceal its contravention(s);any remedial steps taken since the contravention(s) or thepossible contravention was identified, and any action taken by
the licensee against those involved and any steps taken by thelicensee to prevent similar contraventions occurring in future;
the degree of cooperation with the CCE, other relevant
authorities and/or law enforcement agencies during theinvestigation into the contravention(s); andthe likelihood that the licensee will commit the same type ofcontravention in the future if no or a lighter penalty is imposed.

(c) The previous disciplinary record and compliance history of thelicensee, including:
(i)
(ii)
(iii)

the relevant previous disciplinary record of the licensee,including any previous similar contraventions;
whether the licensee has previously undertaken not to engage
in the particular conduct that resulted in the contravention; andany punishment imposed or regulatory action taken or likely to
be taken by other relevant authorities in respect of the same
incident.

(d) Other relevant factors, including:(i)whether the CCE has issued any guidelines in relation to the3

(ii)

(iii)

(iv)

conduct in question - generally the CCE will not takedisciplinary action against a licensee for conduct that is in linewith guidance which was current at the time of the conduct inquestion;
what action the CCE and/or other relevant authorities havetaken in previous similar cases - in general similar cases shouldbe treated in a consistent manner;
the amount of any benefit gained or costs avoided by thelicensee or any of its directors or employees as a result of thecontravention; andany mitigating factors, whether the licensee has promptly,
effectively and completely brought the contravention or
possible contravention to the attention of the CCE.

April 2018
Commissioner of Customs and Excise4