REGULATIONS

Crypto Travel Rule in

Hong Kong

by

the Hong Kong Monetary Authority

🇭🇰
Travel Rule required from
Travel Rule regulation still pending
June 1, 2023
Content last updated
January 5, 2023

On December 7th, 2022, the Hong Kong Legislative Council passed the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022, establishing a licensing regime for VASPs. The new law requires VASPs to apply for a license with the Securities and Futures Commission (SFC) to operate in Hong Kong and imposes statutory anti-money laundering and counter-terrorist financing obligations. Similar to traditional financial institutions, licensing will require fitness and properness, financial resources, and risk management policies and procedures. VASPs have June 1st, 2023, to comply with the new licensing regime.

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1. Is cryptocurrency legal in Hong Kong?

Yes. Cryptocurrency is legal in Hong Kong. 

2. Are there any AML crypto regulations in Hong Kong?

Yes. The Legislative Council passed the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022 (AML/CTF Amendment Bill 2022) on December 7th, 2022. This bill introduced a licensing regime for virtual asset service providers and will impose anti-money laundering (AML), counter-terrorism financing (CTF), and investor protection obligations upon these actors. 

3. Who regulates cryptocurrency in Hong Kong?

No single regulatory body currently regulates crypto-assets in Hong Kong. However, several financial regulators have issued guidance on the subject, including the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA). 

The SFC oversees Hong Kong’s securities and futures markets and has taken a proactive approach to regulating the blockchain industry. As the primary regulatory authority for blockchain in Hong Kong, the SFC can inspect licensed virtual asset service providers (VASPs), request documents, and investigate non-compliance.

4. Are there licensing or registration requirements for VASPs in Hong Kong?

‍Yes. Any person who engages in a virtual asset exchange business in Hong Kong must apply for a license with the SFC. (HKMA. 2022b, pg 50, para 53ZRK) 

View Hong Kong VASPs on the Notabene Network

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FATF Travel Rule Requirements in Hong Kong

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1. Is the Crypto Travel Rule mandated in Hong Kong?

The Crypto Travel Rule will be effective in Hong Kong as of June 1st, 2023. (HKMA. 2022b, pg 17, para 2)

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2. Does Hong Kong permit a grace period to comply with the Crypto Travel Rule?

Yes. To provide industries with more time to prepare for the new regulatory regimes, the provisions on VASP regulation introduced by the AML/CTF Amendment Bill 2022, approved on December 7th, 2022, will come into force on June 1st, 2023. 

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Complying with the Crypto Travel Rule in Hong Kong

1. What is the minimum threshold for the Crypto Travel Rule in Hong Kong?

In Hong Kong, Travel Rule requirements apply regardless of the transaction amount. However, a broader scope of information needs to be transmitted by the Originator VASPs for virtual assets that amount to HKD 8,000 or more. (HKMA. 2022b, pg 303, para 13.A 4(a))

2. What personally identifiable information is required to be shared for the Crypto Travel Rule in Hong Kong?


The scope of data to be exchanged varies depending on the threshold of the transaction, as illustrated below:

(HKMA. 2022b, pg 303, para 13.A (4a), (4b)) Illustrated by Notabene.

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3. Are there differences in customer PII requirements for cross-border transfers versus transfers within Hong Kong?

There are no differences in customer PII requirements for cross-border transfers and transfers within Hong Kong. While in respect to wire transfers, section 12 (6) of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance foresees that:

“A financial institution may, in relation to a domestic wire transfer, include in the message or payment form accompanying the transfer only the the information recorded under subsection (3)(b)” [i.e., “number of the originator’s account (...) or, in the absence of such an account, a unique reference number assigned to the wire transfer by the financial institution].” 

Further, no distinction between domestic and international transfers is made in the provisions applicable to virtual asset transfers introduced by the HKMA’s AML/CTF(Amendment) Bill 2022.

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4. What are the non-custodial or self-hosted wallet requirements in Hong Kong?

There are no specific requirements for transactions with self-hosted wallets in Hong Kong. The AML/CTF(Amendment) Bill 2022 uses the following criteria to define virtual asset transfers that are subject to crypto Travel Rule requirements:

  1. transaction for transferring virtual assets
  2. carried out by an institution (ordering institution) on behalf of an originator
  3. with a view to making the virtual assets available (i) to the originator person or another person (recipient); and (ii) at an institution (beneficiary institution), which may be the ordering institution or another institution

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Why choose Notabene for Crypto Travel Rule Compliance in Hong Kong?

Notabene’s tools help Hong Kong VASPs and financial institutions comply with the Financial Action Task Force’s (FATF) Recommendation 16, also known as the “Crypto Travel Rule,” as required by the HKMA. Our protocol-agnostic solution allows VASPs to securely send, store, and maintain the necessary personal identification information (PII) for Travel Rule transactions worldwide. Get started today; sign up for our Sunrise Plan to respond to regulated transactions for free using the world’s largest VASP Network. 


Relevant links:

Hallatt, W., Lu, J., & Pun, A. 2022. Hong Kong Licensing Regime for Virtual Asset Service Providers Passed with Three-Month Delay to Implementation Timelines. Published December 8, 2022.

HKMA. (Hong Kong Monetary Authority). 2018. Anti-Money Laundering and Counter-Terrorist Financing Ordinance. Amended in 2018.

HKMA. 2022a. Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022 Debate and voting arrangements. Issued November 29, 2022.

HKMA. 2022b. Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022. Published December 7, 2022.

HKMA. 2022c. Passage of Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022. Published December 7, 2022.

Hong Kong Government. 2022. Government welcomes passage of Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022. 

The Government of the Hong Kong Special Administrative Region. 2022. Government welcomes passage of Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022. Published December 8, 2022.

Robertson, B., & James, A. 2022. Hong Kong passes amendment introducing VASP licensing regime. The Block. Published December 8, 2022.

This content is provided for general informational purposes only. By using the content, you agree that the information on this content does not constitute legal, financial or any other form of professional advice. No relationship is created with you, nor any duty of care assumed to you, when you use this content. The content is not a substitute for obtaining any legal, financial or any other form of professional advice from a suitably qualified and licensed advisor. The information on this content may be changed without notice and is not guaranteed to be complete, accurate, correct or up-to-date.

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