In response to an increasing number of payment-related operational incidents reported to the HKMA, the HKMA issued a circular on 28 July 2022 to remind AIs of the importance of maintaining stability in their payment systems and advised that it would step up its surveillance of AIs’ payment operations, including undergoing the relevant examinations. The circular also identified a range of sound practices in respect payment operations by AIs:
(i) Prevention of payment-related operational incidents – AIs should test any new or enhanced payment system with the same level of rigorousness before any system update or enhancement goes live and closely liaise with group counterparts in advance and during the testing process before any system changes are effected
(ii) Monitoring of payment operations – AIs should appoint a dedicated team responsible for ongoing monitoring of payment operations so as to identify any payment irregularities at an early stage and make contingency arrangements
(iii) Robust business continuity planning – AIs should have robust and well-defined business continuity planning which should cover a variety of scenarios (including system failures) and the corresponding contingency options to mitigate any residual risk
(iv) Timely deployment of contingency options – AIs should have processes to escalate any payment-related operational incidents to management and obtain prompt responses at an early stage
(v) Periodic testing – AIs should conduct regular testing of the effectiveness of their business continuity planning so as to identify critical action points and develop practical solutions to expedite recovery
(vi) Incident reporting and communication to stakeholders – AIs should identify internal and external key stakeholders in the payment process upfront and include the communication plan in the business continuity planning, so as to facilitate timely communications with their customers and other relevant parties (such as the HKMA) in case of any payment-related irregularities.
To access a full copy of the circular, please see here.
For further information, please contact:
Simon Deane, Deacons
simon.deane@deacons.com
