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According to the recently released "Anti-Money Laundering and Counter-Terrorist Financing Guidelines" Chapter 12 by the Hong Kong Securities and Futures Commission, financial institutions must conduct customer due diligence before executing non-frequent transactions of no less than HKD 8,000 in virtual assets for their customers.
The scope of the review includes the virtual asset transfer and exchange of the transaction, regardless of whether the transaction is a single operation or several operations related to the financial institution. In addition, financial institutions should not only obtain the customer's general identity information but also collect additional information, including Internet Protocol (IP) address and related timestamps, geographic location data, and device identification codes.
The guidelines also provide guidance on identifying money laundering related to virtual currency. It points out that virtual asset businesses may be used to store cash proceeds from criminal activities and may be used to dispose of or store virtual assets obtained from illegal activities. Criminals or money launderers may transfer assets between different wallet addresses, service providers, virtual asset categories, or blockchains to make the source of virtual assets from illegal activities vague.
The guide also points out that for criminals and money launderers, non-custodial wallets, decentralized virtual asset exchanges, peer-to-peer platforms, and virtual asset businesses that are unregulated or have loose anti-money laundering/counter-terrorist financing control measures are particularly attractive.
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