Hong Kong Fines Indian Overseas Bank for Violation of Anti-Money Laundering and Counter Terrorist Financing Rules

The Hong Kong Monetary Authority (HKMA) has imposed a fine of HK$8.5 million (around ₹9.3 crore) on Indian Overseas Bank’s Hong Kong branch (IOBHK) for not properly following anti-money laundering (AML) and counter-terrorist financing (CFT) rules. The authority called it a “significant failure” by the bank to manage risks as per the law.

Along with IOBHK, two other banks—Bank of Communications (Hong Kong) and Bank of Communications Co., Hong Kong branch—were also fined HK$4 million and HK$3.7 million, respectively.

Why Was IOBHK Fined?

According to HKMA, their investigation found that IOBHK violated three important rules under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) during the period from May 2021 to January 2024.

The authority said that:

• IOBHK’s senior management failed to take proper responsibility for AML/CFT matters.
• Key AML/CFT issues were not discussed seriously in meetings.
• The bank did not appoint a properly trained compliance officer with enough AML/CFT knowledge.
• As a result, alerts raised by the bank’s monitoring software were not properly investigated or acted upon.

What IOB Says

A senior official from Indian Overseas Bank clarified to The Times of India that no fraud or actual violation of AML/CFT occurred. The issue was mainly about how the bank handled the alerts generated by its anti-money laundering software. The bank is now fixing the issue by adding new checks and processes.

The official also noted that IOBHK has no past record of violations, and this problem came up only because of procedural gaps.

Bank’s Official Statement

IOB issued a statement saying it has already taken steps to prevent such issues in the future and is strengthening its internal systems. The bank also said that this penalty will not have any major impact on its operations.

• Download Disciplinary Action against IOBHK
• Download Disciplinary Action against BCOM(HK)
• Download Disciplinary Action against BCOM Hong Kong Branch