The Hong Kong Monetary Authority (HKMA) is a public agency established on April 1, 1993, as a central bank and Hong Kong's currency board. HKMA was established and started operations with the Office of the Commissioner of Banking and the Office of the Exchange Fund.
What is the role of the Hong Kong Monetary Authority?
As the de facto central bank of Hong Kong SAR, the HKMA is tasked with maintaining the Hong Kong dollar's stability, namely the local currency, through various fiscal policies and monetary policy and keeping the parameters at certain levels the deterioration of the economy.
Besides, it has been tasked with advancing Hong Kong's financial systems to keep inflation needed and ensure the free flow of money. The Hong Kong Monetary Authority ensures the Hong Kong dollar's stability (HKD) by indexing the HKD to the US dollar and plays a key role in maintaining a stable exchange rate between the two currencies.
Functions of the Hong Kong Monetary Authority
1.Ensuring Currency Stability
HKMA ensures the stability of the Hong Kong dollar under the Linked Exchange Rate System (LERS). The system strives to keep the exchange rate between the US dollar and the Hong Kong dollar stable.
2.Ensuring the Stability of the Banking System and Financial System
Hong Kong is a financial center hosting the world's largest and most important banks. It also includes multinational banks. HKMA ensures and controls the financial system's integrity by supervising services in the banking system such as deposits, lending, managing investments, and providing insurance services.
Hong Kong Monetary Authority ensures that all financial institutions fulfill their functions fully and maintain the required capital. It also constantly updates its guidelines to keep the regulations in line with international banking.
3.Developing Hong Kong's Financial Infrastructure
HKMA is tasked with maintaining the region as an important financial center in Asia and the world. It continues its mission by maintaining and developing infrastructure to meet international standards.
4.Managing the Exchange Fund
The Exchange Fund is the investment division of the HKMA. The fund was established in 1935 to establish stability in support of the HK dollar. The fund's mission has evolved towards managing reserves.
Anti-Money Laundering and the Hong Kong Monetary Authority
Accepted as an international financial center and the focal point of monetary flow, Hong Kong Monetary Authority takes care to protect its financial systems' integrity and stability by implementing Anti-Money Laundering and Anti-Terrorism (AML / CFT) obligations that comply with international standards.
The banking sector, which is the main instrument of the financial system, plays an important role in this regime. HKMA pioneered AML / CFT Systems' establishment, which included preventive measures such as Customer Due Diligence (CDD), transaction monitoring, and record-keeping to identify and mitigate risks and dangers such as money laundering and terrorist financing.
In conducting the CDD, banks regularly process information from customers and trusted sources at account opening and then decide the normal and usual banking transactions of customers to identify customers and prevent abuse of banking services.