25 June 2003

To: Chief Executive of all authorized insurance institutions
      carrying on long term business

Dear Sir/Madam,

I refer to the Guidance Note on Prevention of Money Laundering ("Guidance Note") issued to you on 7 December 2000 which sets out the principles, practices and measures that should be adopted by the insurance industry to combat money laundering.

Following extensive consultation with the insurance industry, the Insurance Authority has prepared a Supplement to the Supplement to the Guidance Note on Prevention of Money Laundering ("Supplement") & a Guideline on the Combat of Terrorist Financing ("Guideline") . The Supplement should be read or interpreted in conjunction with the relevant parts of the Guidance Note.

The Supplement and the Guideline mainly take into account some of the changes proposed by the Financial Action Task Force on Money Laundering (FATF) in its current review of the 40 Recommendations where the direction of change is clear. They also include some money laundering cases and suspicious indicators proposed by the International Association of Insurance Supervisors.

You should review and revise your current policies and procedures in the prevention of money laundering and terrorist financing so as to comply with the requirements stipulated in the Supplement and Guideline as soon as possible, and in any case not later than 31 December 2003. Please note that paragraphs 2.10 and 7 shall take effect from a date to be determined by the Insurance Authority after considering the finalized wording of the revised 40 Recommendations.

Should you have any questions relating to the Supplement and the Guideline, please feel free to contact Ms. Carol Hui at 2867 2551 or Mr. William Hsieh at 2867 4529. On-line access to the Supplement and the Guideline is also available under the section of "Circulars on Anti-Money Laundering Matters in 2003"of the Insurance Authority's website (http://www.info.gov.hk/oci).

Yours sincerely,

(Benjamin Tang)
Commissioner of Insurance

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