This April 22, 2021 photo shows some of the mobile phones, banking security authentication tokens and cheque books seized during an anti-money laundering operation by Hong Kong Customs. (PHOTO / INFORMATION SERVICES DEPARTMENT, HKSAR GOVT)
The Hong Kong Special Administrative Region government on Friday gazetted the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022, which seeks to impose statutory obligations by introducing a licensing regime for virtual asset service providers and a registration regime for dealers in precious metals and stones.
The bill will be introduced into the Legislative Council for first reading on July 6.
The legislative proposal is pertinent to the fulfilment of the government’s FATF (Financial Action Task Force) obligations, a government spokesperson said, adding that it will mitigate the risk of money laundering and terrorist financing in the city.
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“This will safeguard the integrity of Hong Kong as an international financial center, protect investors and add to our credibility as a trusted and competitive place to do business,” said the spokesperson.
The legislative proposal is pertinent to our fulfilment of the relevant FATF obligations, and will mitigate the risk of money laundering and terrorist financing in Hong Kong.
Spokesperson, HKSAR govt
The FATF is an inter-governmental body entitled with setting international standards on combating money laundering and terrorist financing. Hong Kong has been a member of the FATF since 1991.
Any person who seeks to carry on a business of operating a virtual asset exchange is required to apply for a license from the Securities and Futures Commission, according to a government press release.
The relevant person is subject to the meeting of a fit and proper test as well as the anti-money laundering and counter-terrorist financing and other regulatory requirements, it added.
Under the proposed registration regime for the dealers in precious metals and stones, any person who is seeking to carry on a business of dealing in precious metals and precious stones in the city will be required to register with the Commissioner of Customs and Excise.
There will be two categories of registrants, classified on the basis of whether such dealers are seeking to engage in cash transactions at or above HK$120,000 in the course of their business.
“Dealers who engage in such cash transactions will be subject to anti-money laundering and counter-terrorist financing supervision under the regime,” reads the release.
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The amendment is also aimed at addressing a number of miscellaneous and technical issues under chapter 615 of the ordinance, which have been identified in the Mutual Evaluation and other Financial Action Task Force contexts, according to the government.
To gauge public views on legislative proposals to enhance anti-money laundering and counter-terrorist financing regulation, the SAR government launched a three-month consultation exercise on Nov 3, 2020.
The government and financial regulators recently rolled out a host of measures to ensure the orderly development and operation of the virtual asset sector and respond to challenges arising from investor protection or money laundering risks.
In an article on March 17, Secretary for Financial Services and the Treasury Christopher Hui wrote that the measures cover three areas – establishing a licensing regime for the virtual asset service providers, contemplating the regulation of payment-related stablecoins; and providing traditional financial institutions with guidelines on offering virtual asset-related services to clients.