HKMA Updates Risk-Based AML/CFT Guidance for Politically Exposed Persons
The Hong Kong Monetary Authority (HKMA) has issued an updated version of its guidance on risk-based anti-money laundering and counter-financing of terrorism controls for politically exposed persons (PEPs), with the new materials dated 28 August 2026.
The update applies to all authorized institutions and is accompanied by Smart Tips on the Treatment of Politically Exposed Persons – Version 2.0. HKMA’s regulatory document repository marks the November 2025 PEP guidance as superseded by the new version.
Risk-based treatment remains central
The updated guidance continues to distinguish between non-Hong Kong PEPs and Hong Kong or international-organisation PEPs. Non-Hong Kong PEPs remain subject to specified enhanced due diligence measures, while Hong Kong and international-organisation PEPs are generally treated under the ordinary customer due diligence framework unless the institution’s risk assessment identifies higher money-laundering or terrorist-financing risk.
Where enhanced measures are required, institutions are expected to establish source of wealth and source of funds, obtain appropriate senior-management approval for the business relationship, and apply enhanced ongoing monitoring. Former PEPs require a risk assessment to determine whether enhanced controls remain necessary after the person leaves public office. The framework also extends to relevant family members and close associates on a risk-sensitive basis.
The practical emphasis is proportionality. HKMA’s earlier supervisory work had identified cases where institutions interpreted the PEP definition too broadly or requested excessive source-of-wealth information that was not proportionate to the public function and risk involved. The revised Version 2.0 materials continue the regulator’s effort to align PEP controls with a defensible risk-based approach rather than blanket treatment.
For banks, the update is a timely prompt to review PEP classification logic, escalation thresholds, source-of-wealth requirements and ongoing-monitoring rules against the current HKMA guidance, particularly where legacy controls may still reflect more conservative assumptions.
