Hong Kong’s traditional AML obligations for wire transfers will be extended to all virtual asset service providers (VASPs) operating in Hong Kong by 1 June 2023 in Chapter 12 AMLO.
What is the scope of the Travel Rule in Hong Kong?
A new regulated activity [Regulated virtual asset (VA) activity] will cover the operation of a trading platform (VA Exchange) that:
is operated for the purpose of allowing an offer or invitation to be made to buy or sell any virtual assets (VA) in exchange for any money or any VA; and
comes into custody, control, power or possession of, or over, any money or any VA at any point during its business.
This will not include peer-to-peer (P2P) trading platforms to the extent that the actual transaction is conducted outside the platform and the platform is not involved in the underlying transaction by coming into possession of any money or any virtual asset at any point in time.
Who is the supervisory body for VASPs in Hong Kong?
Securities and Futures Commission (SFC)
What is the Travel Rule threshold in Hong Kong (SFC)?
HKD 8 000 (approxiately EUR 950)
What are the SFC's requirements for information to be exchanged?
Irrespective of the transaction value, Travel Rule information is required. However, less information is required for transactions under HKD 8000 (about USD 1000). Additionally, all Travel Rule information is to be exchanged before or simultaneously with the transfer of virtual assets.
If the amount transferred is equal to or above HKD 8 000 (USD 1000):
originator’s name;
originator’s account number or, in the absence of such an account, a unique reference number;
originator’s address or, customer identification number or identification document number or date and place of birth;
beneficiary’s name;
beneficiary’s account number, in the absence of such an account, a unique reference number.
If the amount transferred is below HKD 8 000 (USD 1000):
originator’s name;
originator’s account number or, in the absence of such an account, a unique reference;
beneficiary’s name;
beneficiary’s account number or, in the absence of such an account, a unique reference number.
Self-hosted wallets are in scope
Information needs to be collected for the transfer to/from self-hosted wallets.
In relation to a virtual asset transfer to a self-hosted wallet:
originator’s name;
originator’s account number maintained with the financial institution (FI), and from which the virtual assets are transferred or, in the absence of such an account, a unique reference number assigned to the virtual asset transfer by the FI;
originator’s address, the originator’s customer identification number or identification document number or, if the originator is an individual, the originator’s date and place of birth;
beneficiary’s name; and the beneficiary’s wallet address.
In relation to a virtual asset transfer from a self-hosted wallet:
originator’s name;
originator’s wallet address;
originator’s address, the originator’s customer identification number or identification document number or, if the originator is an individual, the originator’s date and place of birth;
beneficiary's name; and the number of the beneficiary’s account maintained with the FI and to which the virtual assets are transferred or, in the absence of such an account, a unique reference number assigned to the virtual asset transfer by the FI.
Additionally, the VASP should assess the risks associated with transfers to and from self-hosted wallets and implement appropriate risk-mitigating measures.
Due diligence on counterparties is mandatory and VASPs must:
collect sufficient information about the VA transfer counterparty to enable it to fully understand the nature of the VA transfer counterparty’s business;
understand the nature and expected volume and value of virtual asset transfers with the VA transfer counterparty;
determine from publicly available information the reputation of the VA transfer counterparty and the quality and effectiveness of the Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) regulation and supervision over the VA transfer counterparty by authorities in the jurisdictions in which it operates and/or is incorporated (which perform functions similar to those of the RAs);
assess the AML/CFT controls of the VA transfer counterparty and be satisfied that the AML/CFT controls of the VA transfer counterparty are adequate and effective; and
obtain approval from its senior management.
in addition, the FI should assess whether the VA transfer counterparty can protect the confidentiality and integrity of personal data (e.g. the required originator and recipient information), taking into account the adequacy and robustness of data privacy and security controls of the VA transfer counterparty.
When do you need to comply with the Travel Rule in Hong Kong?
Now. The Travel Rule went live on 1 June 2023.
Which regulations are applicable to the Travel Rule in Hong Kong?
What else do you need to know about the Travel Rule in Hong Kong?
in high ML/TF risk scenarios, where a VASP cannot mitigate or manage the risks presented, it should not execute or facilitate the virtual asset transfer.
VASPs cannot facilitate virtual asset transfers from shell VASPs and institutions (refer to section 12.6.7 for more information).
VASPs are to maintain all data records for 5 years, irrespective if the business relationship has ended before this period.
