Hong Kong Organized Crime Not Into Cryptocurrencies According to Risk Assessment Report

Hong Kong Financial Services and Treasury Bureau (FSTB) releases the Money Laundering and Terrorist Financing Risk Assessment Report

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The Financial Services and Treasury Bureau (FSTB) of Hong Kong has published the Money Laundering and Terrorist Financing Risk Assessment Report. This comes at a time financial crime has been on the rise in the region and the city is trying to fight to overcome it. The suspicious transactions count has grown four times in the last six years, while the rate of convictions has decreased.

There are several complaints by businesses in Hong Kong related to large-scale denial of banking services, due to fear from banks on money laundering risks. This has a big impact on the digital currency community.

The complete report covers on risks of “virtual currencies” by the government of Hong Kong. The report highlights that no specific regulation is present connected to digital currency trade. Also, Money Service Operators licenses only is needed for fiat currency related money services.

Some tokens could qualify as securities, but others could be “Stored Value Facilities” in the same way as PayPal or AliPay. The government emphasize their decision on having no capital control regimes and dedication to being “one of the world’s freest economies”. This attribute to a perceived lack of success of digital currencies to the above characteristics.

The Hong Kong Police Force (HKPF) notifies that there is “no apparent sign of organized crime or ML/TF concerning trading of cryptocurrencies,” even though they were used as a pretext in Ponzi schemes.

Police have received 167 reports related to Bitcoin, since 2013 which was when monitoring first began. Many are related to ransomware such as WannaCry. However, drugs and smuggling are not among these offences, which the police sees as low-risk offences.

Bitcoin Exchanges and ATMs in Hong Kong

Police is keeping Hong Kong under surveillance over the Bitcoin ATMs and Exchanges. They note there are seven such machines, but Bitcoin association suggest there could be double that amount. There are four active exchanges currently, as the report mentions, “they are not popularly used by people in Hong Kong”.

Cryptocurrency users believe that often used payment gateways becomes a risk to money laundering and terrorist financing. Fraud schemes on social media in Hong Kong have resulted in the loss of almost 6.4 million HKD in 2015 and 2016.

Earlier in March, the Hong Kong government announced their aim to secure company service providers and trusts by combating money laundering. This makes it more difficult to create shell companies and trusts, as a result of the new licensing regime.

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