Hong Kong Insurance Authority Fines FWD Life HK$19.5 Million for AML/CFT Control Failures
Hong Kong’s Insurance Authority (IA) has fined FWD Life Insurance Company (Bermuda) Limited HK$19.5 million after finding deficiencies in its anti-money laundering and counter-terrorist financing controls.
The disciplinary action, announced on 24 September 2026 under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615), followed an on-site inspection covering control arrangements over periods between April 2012 and September 2024.
Third-party premium payments
The IA identified weaknesses in FWD’s controls for identifying payors where premiums were paid by third parties. In a sample of 129 bank drafts ranging from HK$400,000 to HK$4.7 million, three had no supporting documentation. For 126 drafts accompanied by Premium Payment Declaration forms stating that the policy holder had purchased the draft, the IA found that 68 were not in fact purchased by the policy holder, insured or settlor who signed the form.
The regulator concluded that the controls did not provide an effective threshold for comprehensive verification of the identity of the actual payor and were insufficient to mitigate the associated money-laundering and terrorist-financing risks.
Transaction monitoring and suspicious activity
The inspection also identified weaknesses in the monitoring of potentially suspicious transactions. During 2022, FWD had no procedure for examining split cash premium payments. When the insurer subsequently reviewed the transactions at the IA’s request, 306 policies involving HK$23.8 million in split cash payments were found to have been funded by unknown parties. A suspicious transaction report was subsequently filed with the Joint Financial Intelligence Unit.
A separate system design issue meant that more than 100 transaction-monitoring alerts were not generated during the relevant period. A further report was subsequently made to the Joint Financial Intelligence Unit.
PEP screening and customer due diligence
The IA found data-capture and screening deficiencies affecting politically exposed persons (PEPs). Beneficial owners of trust and legal-entity policy holders were not screened for PEP status at onboarding or on an ongoing basis between April 2012 and November 2020. Across the inspection period, 58 customers or beneficial owners were not identified as PEPs, including seven foreign or non-Hong Kong PEPs, with the required enhanced due diligence and senior-management approvals therefore not applied in those cases.
The regulator also found that timely senior-management approval had not been obtained before establishing business relationships with 19 high-risk policy holders during 2022.
Remediation and penalty
The IA said FWD has implemented measures to address the deficiencies and strengthen governance, controls and oversight. In determining the HK$19.5 million penalty, the regulator took into account factors including the insurer’s cooperation, early acceptance of the findings, absence of a previous disciplinary record under the AMLO and resources committed to remediation.
FWD said remediation is substantially complete and that a review of customers onboarded during the relevant period found no non-eligible customers had been onboarded.
The IA reiterated that authorised insurers carrying on long-term business are required to maintain effective AML/CFT controls and procedures.
Sources
Hong Kong Insurance Authority — disciplinary action and statement concerning FWD Life Insurance Company (Bermuda) Limited, 24 September 2026.
