Bank of Communications Co., Ltd., Hong Kong Branch · Governance finding · severity 2 of 5
On 22 July 2025 the Hong Kong Monetary Authority imposed a HK$3.7 million penalty on Bank of Communications Co., Ltd., Hong Kong Branch, for anti-money-laundering failures between January 2018 and December 2024. Per the HKMA, the branch did not have effective procedures to ensure that all intended transaction types were covered by its automated transaction monitoring system after the migration of its core banking system, later system changes and new services, so certain transactions were never loaded for scrutiny. As a result it failed to continuously monitor its business relationships with around 3,900 customers. Major omissions were fixed by September 2022 and all by December 2024. The system was automated and not described as AI; a sister bank sharing it was fined HK$4 million.
Record last reviewed Oct 21, 2026 · Markdown
Date
Institution
Bank of Communications Co., Ltd., Hong Kong Branch
Country
Hong Kong
AI system
Transaction monitoring system (TMS) · Automated anti-money-laundering transaction-monitoring system shared with Bank of Communications (Hong Kong) Limited; not described as AI
AI?
Automated system not described as AI
The system was automated, but neither the institution nor a regulator described it as AI; it is listed because it is routinely discussed as an AI failure.
Category
Status
Regulator finding
Severity
2 of 5
Impact
HK$3.7 million pecuniary penalty · Transactions of around 3,900 customers were not appropriately scrutinised; no customer financial loss was reported.
What happened?
The HKMA found that Bank of Communications Co., Ltd., Hong Kong Branch (BCOM Hong Kong Branch) contravened section 19(3) of Schedule 2 to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) by failing to put in place effective procedures to ensure the completeness of the scope of transactions covered by its transaction monitoring system (TMS) upon the migration of its core banking system, subsequent system changes and the introduction of new services. As a result, certain types of transactions were not loaded into the TMS for scrutiny as intended.[1][2]
In respect of around 3,900 customers, the HKMA found the branch also breached section 5(1)(b) of Schedule 2 by failing to continuously monitor its business relationships through appropriate scrutiny of their transactions, whether by the TMS or management information reports. The relevant period ran from January 2018 to December 2024; the major omissions had been identified and rectified by September 2022, and all of them by December 2024.[2]
The HKMA said the contraventions of BCOM Hong Kong Branch and of Bank of Communications (Hong Kong) Limited arose from omissions to load certain types of transactions into the transaction monitoring system the two banks shared, "undermining the system's effectiveness in identifying potentially suspicious activities". It fined Bank of Communications (Hong Kong) Limited HK$4 million in the same announcement, alongside a HK$8.5 million penalty on Indian Overseas Bank, Hong Kong Branch, for separate monitoring failures.[1][3]
When did it happen?
- Jan 2018
Start of the period in which, per the HKMA, the branch's transaction monitoring system did not cover all intended transaction types.[2]
- Sep 2022
The major omissions from the monitoring system have been identified and rectified.[2]
- Dec 2024
Identification and rectification of all omissions is completed.[2]
- Jul 22, 2025
The HKMA imposes a HK$3.7 million pecuniary penalty on BCOM Hong Kong Branch and HK$4 million on Bank of Communications (Hong Kong) Limited.[1][2][3]
What was the impact?
- Financial: HK$3.7 million pecuniary penalty[1][2]
- Customers: Transactions of around 3,900 customers were not appropriately scrutinised; no customer financial loss was reported.[1][2]
Severity 2 of 5: A regulatory finding with a HK$3.7 million penalty (under $1m); transactions of around 3,900 customers were not appropriately scrutinised, but no financial loss to customers was reported.
How did Bank of Communications Co., Ltd., Hong Kong Branch respond?
No public statement from Bank of Communications was found as of 21 October 2026 (checked the HKMA release, the statement of disciplinary action and The Standard's coverage). The HKMA said the branch had taken remedial actions to address the transaction monitoring failures and cooperated with the investigation.[2]
What was the outcome, and did regulators act?
The Monetary Authority ordered BCOM Hong Kong Branch to pay a HK$3.7 million penalty under section 21(2)(c) of the AMLO, taking into account its remedial actions, its cooperation and its lack of previous AMLO disciplinary record. HKMA executive director Raymond Chan said bank management "should ensure that proper transaction monitoring systems and processes are in place and any identified deficiencies are addressed promptly".[1][2]
Why did the HKMA fine Bank of Communications' Hong Kong Branch?
Per the HKMA's July 2025 statement, the branch failed to ensure its transaction monitoring system covered all intended transaction types after a core banking migration, later system changes and new services, so it did not properly monitor transactions of around 3,900 customers between 2018 and 2024. The penalty was HK$3.7 million.
Was the Bank of Communications monitoring system AI?
No. The HKMA described an automated transaction monitoring system into which certain types of transactions were never loaded. It did not describe the system as AI; the failure was in data coverage and change controls around an automated anti-money-laundering tool.
Was any money lost because of the monitoring gap?
The HKMA did not report any customer losses or name any laundered sums. Its finding was that the branch failed to scrutinise transactions of around 3,900 customers as required, weakening its ability to identify potentially suspicious activity.
Did the HKMA fine other Bank of Communications entities?
Yes. In the same 22 July 2025 announcement the HKMA fined Bank of Communications (Hong Kong) Limited HK$4 million for omissions in the same shared monitoring system, and separately fined Indian Overseas Bank, Hong Kong Branch, HK$8.5 million for other monitoring failures.
- Monetary Authority takes disciplinary actions against three banks for contraventions of Anti-Money Laundering and Counter-Terrorist Financing Ordinance official
- Statement of Disciplinary Action: Bank of Communications Co., Ltd., Hong Kong Branch official
- Bank of Communications, other lenders fined $16.2m for monitoring breach news
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