Hong Kong Monetary Authority Warns Bank against being hasty in rejecting digital asset clients

The Hong Kong Monetary Authority (HKMA) reminded banks on April 27 that Anti-Money Laundering (AML) is not a one-size-fits-all solution. Banks should make account opening more manageable.

Arthur Yuen, the deputy chief executive officer of the Hong Kong Monetary Authority, wrote that an influx of companies opening bank accounts in Hong Kong to take advantage of business opportunities has prompted “comments” about the complexities of the process. Yuen connected the increase in activity to the conclusion of the pandemic.

While conducting AML due diligence, banks “should also treat customers fairly and enhance access to basic banking services by businesses through transparent, reasonable, and efficient procedures,” Yuen wrote. Furthermore:

“There is no legal and regulatory requirement prohibiting banks in Hong Kong from providing banking services to virtual assets (VA) related entities.”

In contrast, the Hong Kong government has a policy of encouraging the growth of the virtual asset sector, and a regulatory framework is in place to safeguard investors.

Although some virtual asset businesses pose more significant AML risks than others, Hong Kong’s banking industry will acquire a deeper understanding of the sector over time. Therefore:

“We expect that regulated virtual asset service providers (VASPs) will be able to successfully apply for a bank account through a reasonable process.”

Yuen promised that a circular containing guidance and best practices would be published and a roundtable “for the banking industry and VASPs to exchange views” would be conducted on April 28.

From Hong Kong’s Monetary Authority today

Thank you Chokepoint 2.0! pic.twitter.com/T3sKs0oPpo

— Jason Choi (@mrjasonchoi) April 27, 2023

Hong Kong strives to become a global crypto center and is viewed by some as the likely beneficiary of the United States increasingly vicious anti-crypto campaign.

This region was the first in Asia to offer access to cryptocurrency exchange-traded funds. A proposal to license retail crypto exchanges is currently in consultation, and exchange guidelines are anticipated in May.