Hong Kong ICAC Releases Anti-Corruption Guide for Banking Industry


Hong Kong has become one of the most corruption-free nations in the world. The Transparency International 2022 Corruption Perceptions Index (CPI), the most widely used global corruption ranking system, lists Hong Kong as the 12th most ‘clean’ nation out of 180. The system measures how corrupt a country’s public sector is perceived to be, according to experts and businesspeople.

MCO-Blog-HK-ICAC-Anti-Corruption-Guide-Hong-KongAdmirably, Hong Kong’s CPI score of 76 out of 100 (with 100 being very clean and 0 being highly corrupt) has declined by only 1 point compared to 2012.

Since its establishment in 1974, Hong Kong’s Independent Commission Against Corruption (ICAC) has driven a three-pronged approach of law enforcement, prevention and community education. This approach has seen Hong Kong consistently work against corruption and bribery while actively promoting ethical business behaviours.

Understanding What Constitutes Corruption and Bribery Under Hong Kong Law

The Prevention of Bribery Ordinance (Cap. 201) (POBO), enacted in 1971, is the primary anti-bribery legislation in Hong Kong enforced by the Independent Commission Against Corruption (ICAC). It contains provisions prohibiting bribery in both the public and private sectors.

Under the POBO, offering, soliciting or accepting an advantage by a government official/public servant (public sector) or an agent/employee (private sector) is considered an offence.

Section 4 and Section 9 of the POBO address the criminal nature of bribery of and by public officials and private individuals, which is not limited to monetary forms, but rather what the POBO defines as an “advantage”.


Gifts, Entertainment, and Hospitality Bribery Definitions Under the POBO

Outside of monetary bribes, gifts, entertainment, and hospitality can be perceived as creating an “advantage”, and in some cases, be explicitly defined as bribery.

Quick Facts to Keep in Mind About the POBO Bribery Definitions

  • An “advantage” includes money, gifts, loans, contracts, services, etc. but does not include “entertainment”. An advantage becomes a bribe when there is an illegitimate purpose linked to the offer, solicitation or acceptance, without lawful authority or reasonable excuse, of the advantage provided. There is no minimum value or threshold for an advantage to be considered a bribe.

  • “Entertainment” means the provision of food or drink, for consumption on the occasion when it is provided, and of any other entertainment connected with it. Although the acceptance of entertainment does not breach the POBO, individual public sector departments and private sector policies and codes of conduct should still stipulate the conditions for employees’ acceptance of entertainment.

  • “Hospitality”, such as tickets to a performance or sporting event or hotel accommodation, is considered an advantage (not “entertainment”) under the POBO.

Whenever an associate, third party, or member of the public thinks an employee is being unduly influenced in their decisions and actions (either now or in the future), it can create perceived conflicts of interest. Even when no actual conflict of interest occurs, the perception can still expose organisations to regulatory scrutiny and reputational damage.

MCO-Blog-HK-ICAC-Anti-Corruption-Guide-GiftsBanks and financial firms must have clear policies in place for the giving and receiving of gifts, entertainment, and hospitality (GEH) to avoid conflicts of interest (either actual or perceived) and prevent corruption and bribery. It is also essential for compliance teams to have the processes and tools to monitor gifts, entertainment and hospitality transactions and activities proactively.

Your GEH policies should provide clarity and direction on when employees can or cannot accept gifts and dollar values of what they can accept. The maintenance of a central register also makes it easy for employees to declare GEH items - and for your compliance team to track these activities.

MCO’s Gifts, Entertainment and Hospitality (GEH) module offers a comprehensive way to monitor employee gifts, meals, entertainment, travel and hospitality activities, allowing firms to record and detect risks arising from gifts and entertainment. It will enable your firm’s policies to be embedded with a rules-based approach to identifying potential misconduct and bribery risk.

Download your Gifts, Entertainment, and Hospitality Compliance brochure for more information.


Anti-Corruption Measures Banks and Financial Firms Can Take

Banks and financial services firms must have robust governance and internal controls to achieve their growth goals, sustainable operations, and value to customers, investors, and communities. However, corruption and bribery create severe risks of financial, operational, and reputational damage to firms. This type of unethical behaviour can also erode the trust of customers and stakeholders.

Firms must be proactive in working against corruption and bribery to uphold the integrity of the banking industry and their reputations. Anti-corruption measures that banks can take include:

  • Regular risk assessments with transparency of findings.
  • Adherence to industry and internal codes of conduct.
  • Internal corruption prevention processes and controls.
  • Driving organisation-wide ethical business and culture programs.
  • Adoption of technologies to monitor and act on potential risks.


The Hong Kong ICAC Anti-Corruption Guide for the Banking Industry

MCO-Blog-HK-ICAC-Anti-Corruption-Guide-Corporate-GuideThe ICAC has recently released an Anti-Corruption Guide with the support of the Hong Kong Monetary Authority (HKMA) and the banking industry. The anti-corruption guide will assist Authorised Institutions (AIs) to establish and strengthen their corruption prevention capabilities.

This Guide contains practical guidance on anti-bribery legislation, effective corporate governance elements, anti-corruption measures that AIs can undertake, and the corruption risks and safeguards that AIs should be aware of within their core operations. Risks can include the management of bank accounts, credit facility and loan services, sales process and wealth management, procurement, and staff administration. The Guide also covers common corruption loopholes in firms’ core operations with recommended control measures.

Download the ICAC Anti-Corruption Guide for the Banking Industry.

Additionally, the ICAC continues its focus on providing insurance companies with tailored advisory services and training. In collaboration with the Insurance Authority and trade associations, the “Integrity for Success” Ethics Promotion Campaign has been launched to keep insurance firms, intermediaries, new joiners, and policy-holders updated and informed with useful resources and corruption prevention advice.

See the Integrity for Success website for further information.

The Hong Kong Business Ethics Development Centre (the Centre) also provides free consultancy services to help firms implement and maintain the necessary ethical business programs to reduce their risk of corruption.


HKMA’s Supervisory Policy Manual (SPM) Code of Conduct

Additionally, the HKMA’s Supervisory Policy Manual (SPM) module CG-3 “Code of Conduct” provides AIs with clear guidelines of the HKMA’s expectations of the code of conduct (including ethical business values, conflicts of interest, and use of information) that AIs should follow to actively work against corruption and bribery and unethical behaviour.

MCO-Blog-HK-ICAC-Anti-Corruption-Guide-Hong-Kong-BanksThe SPM module CG-3 was updated in December 222 to include stronger requirements for AI employees to consider conflicts of interest between that of the AI and the employees’ private interests. The interests of employees also extend to relatives, personal friends and other close personal relationships.

See the MyComplianceOffice (MCO) in-depth article for ideas and insights on How to Manage Connected Persons and Personal Relationships.

Under the SPM updates, AI employees must declare when they become aware that they, or their connected persons, have performed any role or taken any action that poses a risk of creating a conflict of interest for that employee.

Other updates to the SPM have been made with the intention to:

  • Incorporate the relevant provisions of the Prevention of Bribery Ordinance (POBO) and provide guidance to raise staff awareness on corruption prevention.
  • Update the existing guidelines to enhance the internal control systems for enforcing the Code of Conduct.
  • Enhance the clarity of guidance in relation to the adoption of group policies for foreign bank branches.


The Consequences of Failing to Uphold Appropriate Anti-Corruption Measures

Two recent cases of the ICAC taking decisive action against corruption serve as stark reminders of the financial, reputation, and personal consequences that can arise for firms that fail to protect themselves against instances of corruption and bribery.

Four Employees Sentenced in Convoy Global Holdings Limited Case

In 2017, the ICAC and SFC mounted their first reported joint operation to pursue potential breaches under the Prevention of Bribery Ordinance (POBO). As a result, executive directors of Hong Kong-listed financial advisory firm Convoy Global Holdings Limited were arrested, and eight properties were raided.

Financial and reputational damage to Convoy swiftly followed, with the company’s share price falling 7% following the raids. Convoy was subsequently forced to request a halt to trading its shares on the Hong Kong Stock Exchange (HKEx).

MCO-Blog-HK-ICAC-Anti-Corruption-Guide-ArrestThe resulting prosecution saw six individuals in two separate trials before the Hong Kong District Court answering counts of conspiracy to defraud. The charges related to Convoy’s acquisition of an investment company at a consideration of over HK$89 million and a bond offering where over HK$49.6 million was paid as commission for the placement of bonds via an intermediary to a brokerage firm.

The second of these trials saw the conviction of former CEO Mark Mak Kwong-yiu, former CFO Christie Chan Lai-yee, former manager Wong Shuk-on and broker Lee Yick-ming. The four were found guilty of conspiracy of charges to defraud the company and the HKEx, and sentenced in October 2021 to between four and seven months in prison each.

HKIA Third Runway prosecutions

The ICAC released an announcement in August 2022 of the arrest of 30 individuals for alleged corruption over the awarding of works, material supplies contracts, and related administrative and financial arrangements.

MCO-Blog-HK-ICAC-Anti-Corruption-Guide-MoneyThe General Manager, a Principal Manager, a Senior Manager and a Senior Project Inspector employed by the Airport Authority Hong Kong (Airport Authority) on short-term contracts for its Three-runway System Project (3RS Project), and 26 persons who are staff members of the primary contractors, subcontractors and other persons, are implicated in the scheme.

The giving and receiving of bribes totalling HK$5 million are alleged to have taken place concerning the awarding of works and material supplies contracts, as well as administrative and financial matters associated with the 3RS Project. In addition, bribery payments were allegedly deposited into the bank accounts of the arrested Principal Manager over the course of several years, with family members assisting in depositing some of the payments. To date, 10 people have been charged in 5 cases over the matter.

See the latest release about this case for more information.


Looking to the Future with the International Anti-corruption Academy

In light of the overwhelmingly positive response to training and courses supplied over the years, ICAC is now looking to consolidate its resources and facilities to set up an International Anti-corruption Academy, Hong Kong (the Academy).

As ICAC commissioner Woo Ying-ming explains in an interview with Sing Tao Daily, “We are now reallocating our internal resources and training equipment for the proposed construction of the Hong Kong International Anti-Corruption Academy.

“The Academy will serve four purposes. The first is to provide members of overseas anti-graft agencies with training courses, through which they will learn about the efficient work by Hong Kong and China in combating corruption.” 

As an additional outcome of the Academy plans, the ICAC hopes to raise its global integrity perception and positively impact reporting Transparency International 2022 Corruption Perceptions Index.


Using RegTech to Reduce Conflicts of Interest and Corruption Risk

The ICAC’s three-pronged approach of law enforcement, corruption prevention, and education is key to safeguarding Hong Kong’s probity environment. However, it is just as critical for firms to stay a step ahead of unethical behaviour, corruption and bribery.

Banks and financial firms can further protect their interests by leveraging technology to monitor and reduce conflicts of interest, support ethical business dealings, and ensure regulatory compliance throughout the organisation.

Your RegTech Anti-Bribery and Corruption Solution

The MyComplianceOffice (MCO) Anti-Bribery and Corruption solution comprehensively addresses the challenges of ABC through our “Know Your Employee” and “Know Your Third Party” compliance suites. These powerful suites help compliance teams manage data collection and facilitate workflow, communications, alerts, approval, reporting and record-keeping for critical regulatory compliance tasks.

Download your Anti-Bribery and Corruption solution brochure for more information.

Know Your Third-Party Risks with a RegTech KTYP Solution

Performing due diligence is critical for all firms before contracting with a service provider. However, as seen in the HKIA Third Runway case, monitoring ongoing contracts, activities, and financial arrangements is just as important.

But the key to effective risk management is an ongoing follow-up process to ensure the controls at the start of the relationship remain in place over time - and change as necessary to manage new risks. MCO’s Know Your Third Party (KYTP) risk management module automates the end-to-end process to reduce the complexity of managing third-party contracts and relationships, and significantly reduce the risk of corruption and bribery through vendor and third-party activities.

Download your Anti-Bribery and Corruption solution brochure for more information.

RegTech to Manage Gifts, Entertainment, and Hospitality

MCO’s Gifts, Entertainment and Hospitality (GEH) module also delivers a robust solution for monitoring employee gifts, meals, entertainment, travel and hospitality activities, allowing firms to record and detect risk within declared gifts and entertainment. It will enable your firm’s policies to be embedded with a rules-based approach to identifying potential misconduct and bribery risk.

Download your Gifts, Entertainment, and Hospitality Compliance brochure for more information.

MCO brings the only fully integrated, comprehensive compliance management platform that uses a global company and security master dataset to identify conflicts across firm transactions (deals, research, and trades), employees, and third parties.

Access your Integrated Compliance Management brochure now to learn how your firm can reduce the time, effort, and costs associated with mitigating risk and upholding regulatory compliance.



Or book your no-obligation demonstration of MCO’s award-winning regulatory compliance management platform.