Hong Kong’s Financial Services and Treasury (FSTB) has released a report on Money Laundering and Terrorist Financing Risk Assessment. This report comes amongst a pressing city-wide debate on whether the authorities are adequately combatting financial crime. Many people feel as though they are not as the number of suspicious transactions has quadrupled in the past 6 years, all the while convictions have reduced.
Banks have now come to fear any money laundering risks and have denied banking services to some Hong Kong based exchanges. This has hit the cryptocurrency community hard and thus this report is important for the growth of a cryptocurrency market in Hong Kong.
The report talks about the risk of cryptocurrencies, including the fact that no specific regulation exists around cryptocurrency trading. However, Money Service Operators licences only have to be obtained for fiat currency services.
According to the Hong Kong Police Force (HKPF), there appears, “no apparent sign of organised crime… concerning the trading of cryptocurrencies,” although they may have been used for scams or Ponzi schemes.
In 2013 police began to monitor cryptocurrencies and since then they’ve only received 167 Bitcoin-related reports. Most of these reports have been to do with Ransomware, however, they do not include drug or smuggling amongst these numbers (as they consider these low risk).
The report also suggests that the Hong Kong exchanges “are not popularly used by people of Hong Kong.”
Overall this is good news for the cryptosphere, as a government body is confirming the crime risks of cryptocurrency are low. The argument of crypto crime is often cited against cryptocurrency, however, the government in Hong Kong assesses the Stored Value Asset risk of PayPal or Mastercard to be much higher than that of crypto. That means FIAT is considered more of a money laundering and terrorism risk in Hong Kong.
This report, therefore, is another argument for cryptocurrency and the blockchain technology it uses.