Hong Kong Amends Anti-Money Laundering Bill to Include Crypto, Here’s What It Means

Hong Kong Amends Anti-Money Laundering Bill to Include Crypto, Here’s What It Means

Hong Kong Amends Anti-Money Laundering Bill to Include Crypto, Here's What It Means

Crypto-assets have often been criticized by global lawmakers for facilitating anonymous money laundering procedures. Hong Kong, which recently became the most crypto-ready nation in the world, has taken a proactive step to ensure that crypto assets are not misused by criminals to illegally move illicit funds. Amendments have been made to the Hong Kong Anti-Money Laundering (AML) and Anti-Terrorist Financing (Amendment) Bill 2022, to now also include crypto transactions.

Hong Kong is now looking to regulate crypto-related activities within its borders. The amended bill will require crypto companies facilitating exchanges and payments to obtain a license. To obtain this license, companies will have to prove that they comply with Hong Kong’s AML rules.

“The above amendment will enter into force on June 1, 2023 in order to allow sufficient time for the preparatory work. The Hong Kong Monetary Authority will soon consult with the banking industry on corresponding changes to the guidelines on topical issues,” the Hong Kong authorities said in a statement.

Violating the guidelines could cost virtual asset service providers (VASPs) up to $5 million (around Rs 40 crore) in penalties, as well as up to seven years in prison, according to a report by Wu Blockchain .

The amended guidelines also tighten the noose around crypto advertisers, who could put people at financial risk by promoting unauthorized projects and assets.

According to Triple-A statistics, Hong Kong had over 245,000 cryptocurrency owners in 2021.

Forex, in its latest “Worldwide Crypto Readiness Report”, suggested that Hong Kong is the most crypto-ready country in the world. In the index, Hong Kong scored 8.6 out of 10 in profitability for the crypto sector.

The accelerated growth of the crypto industry in Hong Kong has also caught the attention of hackers and scammers this year.

Hong Kong has seen a 105% increase in crypto scams in the first six months of this year. Between January and July 2022, Hong Kong’s crypto community collectively lost $50 million (about Rs. 400 crore) to scammers.

Therefore, it is no surprise that authorities are taking action to combat crypto crimes.

Last November, the Paris-based Financial Action Task Force (FATF) called on countries to comply with its anti-money laundering regulations to avoid being ‘grey listed’.

According to FATF guidelines, governments in several countries must collect identifying information about senders, recipients and beneficiaries of virtual assets. The regulations also require all VASPs to be registered and licensed in the countries.

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