Hong Kong’s Government Adopts FATF Crypto Regulations Style

The Hong Kong authorities have adopted the FATF crypto regulations style-recommended anti-money laundering (AML) and counter-terrorist financing (CTF) compliances. The FATF has already described the jurisdiction as “largely compliant”.

27 February, 2020 | AtoZ Markets – Hong Kong is one of the leading Asian jurisdictions for the crypto industry. Many crypto companies are based and operate there. This includes crypto exchanges over the counter offices and brokers. On February 26, Hong Kong’s financial secretary Paul Chan said his administration would strengthen its anti-money laundering (AML) and Counter-terrorist financing (CTF) policies regarding crypto.

Hong Kong Considering Additional FATF Style Crypto Regulations 

In his recent budget speech, Chan said the changes would respond to recommendations made by the International Financial Action Task Force (FATF), the financial market supervisor.

The FATF updated its guidelines in June 2019 to specifically include virtual currencies. It recommended that regulators keep information about the sender and the receiver in transactions above a certain threshold.

Chan said the new regulations could target virtual asset service providers (VASP), the catch-all term used by the FATF in its latest “travel rules” guidelines.

The new regulations could put pressure on crypto exchanges, over-the-counter desks and brokers in Hong Kong, a global crypto hub. These entities are already overseen by the Hong Kong Monetary Authority (HKMA), which recommended in December that VASPs remain vigilant in self-regulating the activities of their clients.

The FATF assessed Hong Kong as “largely compliant” with its AML / CFT guidelines following an assessment carried out in September 2019. However, this has made Hong Kong the leading jurisdiction in the Asia region -Pacific to pass the FATF assessment.

The proposed changes to Hong Kong’s AML /CTF policies were presented as part of the government’s 2020-21 budget and will be adopted after a period of public consultation. Carmen Chu, HBC AML law enforcement official, also said:

Authorized institutions should keep abreast of international and local developments to maintain an updated understanding of the risks. The institutions should apply a risk-based approach that supports responsible financial innovation as well as effective ML/TF risk management.

Read More: Iran’s General Proposes Use of Cryptocurrency to Evade Sanction

Who Will the New Regulations Affect?

Chan said the changes would mainly affect cryptocurrency exchanges and money transfer service providers. He also added that “detailed of the proposals” will release later this year. However, dealers in precious metals, stones, and jewelry will also be subject to the new AML/CTF framework.

At the same time, crypto companies themselves strive to comply with the Travel Rule. It also provides that cryptocurrency exchanges and others share transaction information beyond certain thresholds. However, they have until June 2020 to do so.

The Monetary Authority of Singapore, MAS also enforced New AML Crypto Regulations (Payment Services Act) which had come into force on 29 January 2020.

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