Crypto assets have often drawn criticism from global lawmakers for being an instrument of facilitating anonymous money laundering procedures. Hong Kong, that recently emerged as the most crypto ready nation in the world, has taken a proactive step to ensure that crypto assets are not misused by criminals for moving illicit funds, illegally. Amendments have been made to Hong Kong's Anti-Money Laundering (AML) and Counter-Terrorist Financing (Amendment) Bill 2022, to now include crypto transactions as well.
Hong Kong is now looking to regulate crypto-related activities stemming inside its borders. The amended bill will require crypto firms facilitating exchanges and payments, to obtain a licence. To procure this licence, the companies will have to prove that they are in compliance with Hong Kong's AML rules.
“The above amendment will come into operation on 1 June 2023 to provide sufficient time for preparatory work. The Hong Kong Monetary Authority will soon consult the banking sector on corresponding changes to the guidelines on topical issues,” the Hong Kong authorities said in a statement.
Violating the guidelines could cost virtual asset service providers (VASPs) up to $5 million (roughly Rs. 40 crore) in penalties, as well as up to seven years in prison, a report by Wu Blockchain claimed.
The amended guidelines also tighten the noose around crypto advertisers, who could be exposing people to financial risks by promoting unauthorised projects and assets.
As per Triple-A statistics, Hong Kong contained over 245,000 cryptocurrency owners in 2021.
Forex, in its latest ‘Worldwide Crypto Readiness Report' suggested that Hong Kong is the most crypto-ready country in the world. In the index, Hong Kong bagged 8.6 out of 10 in-terms of being lucrative for the crypto sector.
The accelerating growth of the crypto industry in Hong Kong has also captured the attention of hackers and scammers this year.
Hong Kong has observed a 105 percent hike in crypto scams in the first six months of this year. Between January and July 2022, the crypto community in Hong Kong has collectively lost $50 million (roughly Rs. 400 crore) to conmen.
Therefore, it does not come as a surprise that the authorities there are taking steps to curb crypto crimes.
Back in November, Paris-based Financial Action Task Force (FATF) mandated countries to abide by its AML regulations to avoid being ‘grey listed'.
As per the FATF guidelines, the governments of several countries need to collect identificatory information on the senders, recipients, and beneficiaries of virtual assets. The regulations also ask all VASPs to be registered and licenced within the countries.
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