Hong Kong Financial Authorities To Apply FATF Regulations To Crypto Exchanges, Brokers
- Hong Kong proposes new regulations to target Virtual Asset Service Providers (VASP) in accordance with FATF recommendations.
- This is despite Hong Kong being miles ahead of its Asia-Pacific peers and receiving high ratings from the financial agency.
Reports have emerged that the Hong Kong government is looking to increase its efforts in the regulation of the crypto space. This is in a bid to increase adherence to the global Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) guidelines.
In a speech by Paul Chan, Hong Kong’s Financial Secretary the government is going to use the recommendations by Financial Action Task Force (FATF) assessment to better their AML/CTF agenda. Notably, they plan to include Virtual Asset Service Providers (VASP) and precious metal merchants into their AML/CTF framework with plans to include the public’s input on the same.
The new regulations are to unsettle crypto exchanges and Over the Counter Brokers (OTC) in Hong Kong which has so far been crypto-friendly. In a memo from Hong Kong Money Authority (HKMA) official Carmen Chu to heads of all Authorized Institutions (AI) where she indicated that AI should treat the VASP’s different depending on the risk assessment for individual VASPs.
“Assessing the AML/CFT controls of the VASP as appropriate The extent of customer due diligence measures should be commensurate with the assessed ML/TF risks of the VASP”
In June last year, the FATF updated its guidelines in regards to the AML/CTF standards. The proposal stipulated that countries would now hold virtual assets to the same regard as property or funds.
The FATF would also obligate VASP’s to share detailed transactional information such as the sender and destination of funds for transactions above USD/EUR 1000. This information should be readily available for the next five years in case the regulators come calling.
Hong Kong rated highly compliant by FATF
This is despite Hong Kong ranking highly in the global watchdog’s FATF assessment. They rank as the first jurisdiction in Asia-Pacific to have aced the FATF assessment. Countries are now racing towards achieving FATF compliance standards with reports of private partnerships among countries to collaborate efforts to monitor cryptocurrency transactions.