Hong Kong will strengthen its policies around crypto money laundering (AML) and terrorist financing in response to Financial Action Task Force recommendations, said Paul Chan Mo-po, the financial secretary of Hong Kong.
According to the Hong Kong Economic Times, the Financial Action Task Force (FATF), a watchdog under the G7, evaluated Hong Kong’s current AML regulatory framework. It recommended that Hong Kong tighten policies concerning crypto and companies dealing with the asset class, to comply more closely with its standards.
The changes to Hong Kong’s AML and terrorist financing prevention framework were proposed as a part of its annual 2020-21 budget, and will go through a process of public consultation before being finalized.
G20 pushes for FATF compliance
Hong Kong’s swift adoption of the FATF’s crypto guidelines comes in the wake of a push by the G20 to encourage compliance.
On February 23, the G20 said:
“Building on the 2019 Leaders’ Declaration, we urge countries to implement the recently adopted Financial Action Task Force (FATF) standards on virtual assets and related providers. We reiterate our statement in October 2019 regarding the so-called ‘global stablecoins’ and other similar arrangements that such risks need to be evaluated and appropriately addressed before they commence operation, and support the FSB’s efforts to develop regulatory recommendations with respect to these arrangements.”
Other major cryptocurrency markets, including Japan and South Korea, are moving to comply with the FATF’s guidelines.
Based on secretary Chan’s statement, the tightened policies are expected to primarily affect exchanges and potentially remittance service providers handling cryptocurrencies.
With Bitspark, a major cryptocurrency remittance company in Hong Kong, having shut down in early February due to protests and coronavirus fears, it remains to be seen what impact the enhanced framework will have on Hong Kong’s crypto exchanges and remittance markets.