Fintech Advisory

Virtual asset trading platform operators 

A new licensing regime for virtual asset trading platform operator (VATPO) comes into effect in Hong Kong on 1 June 2023. 

VATPOs will be considered as Hong Kong companies that will be engaged in operating a virtual asset (VA) exchange in Hong Kong. Upon commencement of the new regime, all centralised VA trading platforms carrying on their businesses in Hong Kong or actively marketing their services to Hong Kong investors need to be licensed and regulated by the SFC, irrespective of whether they provide trading services in security tokens or not.

In addition, according to the circular on implementation of new licensing regime for virtual asset trading platforms issued by the SFC on 31 May 2023 and the related Licensing Handbook for Virtual Asset Trading Platform Operators, each VATPO applicant under the existing SFO regime and/or the AMLO VASP regime is required to submit (i) an external assessor report when submitting its license application, and (ii) another external assessor report after an approval-in-principle has been granted by the SFC.

For the external assessment, the scope will cover the following areas:

• Part A – Governance and staffing
• Part B – Token admission
• Part C – Custody of virtual assets
• Part D – Know-your-clients (KYC)
• Part E – Anti-money laundering and counter-financing of terrorism
• Part F – Market surveillance
• Part G – Risk management
• Part H – Cybersecurity

BDO has been engaged by various VATPOs to perform the external assessments on all of the above areas and we have a team of dedicated and experienced digital advisory professionals whom can provide handy assistance and support to VATPOs in identifying compliance gaps and providing related recommendations. 

Multiple credit reference agencies 

In 2022, led by HKMA, Multiple Credit Reference Agencies (MCRAs) Model was implemented in order to enhance the financial infrastructure. HKMA has also set out the expectation on authorised institutions (AIs) are involved in the provision of consumer credit to participate in the sharing and use of consumer credit data.

Money lenders can apply to be a Type Two member upon fulfilment of requirements under Clause 4.1.3.2 of the Multiple Credit Reference Agencies Model Governance Framework.

Applicant for Type Two membership shall submit an application form at its own cost with an independent assessment reports prepared by an independent assessor that are acceptable to the Multiple Credit Reference Agencies User Group (MCRAUG) and relevant supporting documents to demonstrate that it has fulfilled the onboarding criteria including:

Company due diligence

i. Positive company background
ii. Sustainable financial capability
iii. Necessity for the consumer credit reference service by validating its provision of consumer credit service

System/technology

iv. Sufficient security measures and protection on consumer credit data
v. Compliance with the CCD Code
vi. Data integrity and data quality

Others

vii. Subscribing to the services of one or more of the selected CRAs

BDO has been engaged by various money lenders to perform the independent assessments on all of the above areas and we have a team of dedicated and experienced digital advisory professionals whom can provide handy assistance and support to money lenders. 

Other fintech advisory

BDO has been providing advisory services to fintech firms such as payment gateway, stored-value facilities (SVF) etc, in the following areas:

• System and organisation controls (SOC) report
• Internal audit services
• Anti-money laundering compliance review
• Independent review in relating to license application
• IT security and cybersecurity services