To maintain the financial stability and facilitate the economic growth of Hong Kong, regulators have been reviewing regulations, guidelines and compliance regularly. Regulators around the globe may introduce new requirements or take enforcement actions from time to time. In our ‘financial services sector updates’, it will include the latest development of the sector for your reference:
SFC sets out vision to foster a vibrant fintech ecosystem in Hong Kong
The Securities and Futures Commission (SFC) has articulated a forward-looking vision to cultivate a dynamic and resilient fintech ecosystem in Hong Kong. This vision was detailed by Dr. Eric Yip, the SFC’s Executive Director of Intermediaries, during his speech at Fintech Week 2024. The SFC's initiatives are designed to strike a balance between fostering market development and ensuring robust investor protection.
Key initiatives include:
- Swift Licensing Process for VATPs: The SFC is expediting the licensing process for virtual asset trading platforms (VATPs). This involves a streamlined approval process for deemed-to-be-licensed applicants, leveraging risk-based on-site inspections and direct engagement with senior management. The first batch of formal licenses is expected by the end of the year.
- Consultative Panel for VATPs: To support the sustainable development of licensed VATPs, the SFC is establishing a consultative panel. This panel will include representatives from each licensed VATP, ensuring their perspectives are considered in policymaking. The panel's feedback, along with input from other stakeholders, will inform the SFC’s forthcoming white paper on regulatory priorities for the virtual asset industry.
- Further Regulatory Building Blocks: The SFC is collaborating with the HKSAR Government and other regulatory bodies to develop proposals for regulating virtual asset trading and custody services. This effort underscores the SFC’s commitment to enabling the responsible growth of the virtual asset industry.
- Tokenisation and Project Ensemble: The SFC continues to support tokenisation initiatives, playing a key role in the Hong Kong Monetary Authority’s Project Ensemble. This project aims to establish the necessary infrastructure for Hong Kong’s tokenisation ecosystem, setting industry standards for tokenised asset settlement
Read more from the source:
https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=24PR180
Expansion of Suspicious Account Alert for Automated Teller Machine transactions
The Hong Kong Monetary Authority (HKMA), in collaboration with the Hong Kong Police Force and the Hong Kong Association of Banks (HKAB), has announced the expansion of the Suspicious Account Alert mechanism to include ATM transactions, effective from 8 December 2024. This initiative involves 22 participating banks and aims to enhance the detection and prevention of fraudulent activities.
The expanded alert mechanism will now cover transfers conducted at ATMs, including real-time same bank transfers, inter-bank transfers, and cash deposits. Customers will receive alerts if the recipient’s account details are flagged as “High Risk” by the Police’s Scameter, a scam and pitfall search engine. This alert system, initially introduced for FPS proxy IDs and later expanded to internet banking and branch transactions, has already issued over 24,000 alerts in the third quarter of this year, helping to prevent high-risk transactions.
The HKMA emphasises the importance of verifying payment details and the payee’s identity before proceeding with transactions. The public is advised to terminate any transaction if there is doubt about its legitimacy. The HKMA will continue to work closely with the Police and the banking industry to evaluate the effectiveness of these anti-fraud measures and to combat digital scams actively.
Read more from the source:
https://www.hkma.gov.hk/eng/news-and-media/press-releases/2024/12/20241205-4/
SFC licenses virtual asset trading platforms under swift licensing process
On 18 December 2024, the Securities and Futures Commission (SFC) granted licenses to four virtual asset trading platform (VATP) applicants under its swift licensing process. This decision follows the completion of risk-based on-site inspections initiated in June 2024. The licensed platforms, which include Accumulus GBA Technology (Hongkong) Co., Limited, DFX Labs Company Limited, Hong Kong Digital Asset EX Limited, and Thousand Whales Technology (BVI) Limited, are permitted to operate on a restricted scope of business after addressing the SFC’s inspection feedback and completing independent vulnerability assessments and penetration tests.
Dr. Eric Yip, the SFC’s Executive Director of Intermediaries, highlighted the proactive engagement with VATPs’ senior management and ultimate controllers, which has expedited the licensing process and reinforced regulatory standards. This approach will continue during the second-phase assessment, where the SFC will supervise the process alongside external assessors. Upon satisfactory completion, the business scope restrictions will be lifted.
The SFC also published a circular outlining a clear roadmap for the licensing process and providing further guidance on the second-phase assessment. This initiative underscores the SFC’s commitment to balancing investor protection with the continuous development of Hong Kong’s virtual asset ecosystem.
Read more from the source:
https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=24PR211
SFC’s warning to public regarding Proxinex for suspected virtual asset-related fraud
On 18 December 2024, the Securities and Futures Commission (SFC) granted licenses to four virtual asset trading platform (VATP) applicants under its swift licensing process. This decision follows the completion of risk-based on-site inspections initiated in June 2024. The licensed platforms, which include Accumulus GBA Technology (Hongkong) Co., Limited, DFX Labs Company Limited, Hong Kong Digital Asset EX Limited, and Thousand Whales Technology (BVI) Limited, are permitted to operate on a restricted scope of business after addressing the SFC’s inspection feedback and completing independent vulnerability assessments and penetration tests.
Dr. Eric Yip, the SFC’s Executive Director of Intermediaries, highlighted the proactive engagement with VATPs’ senior management and ultimate controllers, which has expedited the licensing process and reinforced regulatory standards. This approach will continue during the second-phase assessment, where the SFC will supervise the process alongside external assessors. Upon satisfactory completion, the business scope restrictions will be lifted.
The SFC also published a circular outlining a clear roadmap for the licensing process and providing further guidance on the second-phase assessment. This initiative underscores the SFC’s commitment to balancing investor protection with the continuous development of Hong Kong’s virtual asset ecosystem.
Read more from the source:
https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=24PR211
How can BDO help?
It is important for financial institutions to keep up with compliance regulations updates from regulatory bodies, also implement any updates to existing effective compliance controls, inform and continuously refresh responsible management and staffs’ regulatory requirement knowledge.
Our financial services team is a group of dedicated qualified and experienced compliance consultants who have up-to-date knowledge on regulatory requirements in the financial services industry and can provide consultancy service in relation to compliance with internal control procedures and regulations, independent assessment for license application, staff secondment, third-party assurance, etc. Get in touch to see how we can help your company!