Hong Kong SFC Concludes Consultation on the Proposed Regulatory Requirements

On 23 May 2023, Hong Kong SFC published its Consultation Conclusions on the Proposed Regulatory Requirements for Virtual Asset Trading Platform Operators Licensed by the SFC, summarising 152 responses to its industry consultation from 20 February to 31 March 2023.

We highlight the SFC’s responses to them pertaining to Travel Rule (TR) (question 9) below:

• Immediate and secure requirement —TR data submission “as soon as practicable” to be allowed till 1 Jan 2024 as an interim measure. However, SFC noted there are technology solutions already facilitating immediate and secure transactions. We would highlight that all of VerifyVASPs’ 4 million transactions processed to date are immediate and secure
• Unhosted wallets — sanctions screening remains a requirement and VASPs should only allow transactions with wallets that are assessed to be reliable. Periodic reviews of whitelisted wallets should be done to ascertain that ownership remains consistent
• Counterparty due diligence — This is an important requirement including the ongoing screening and monitoring of transactions. Additionally, due diligence on VASPs with multiple entities should be conducted on a per-entity basis
• Transfers lacking required information — returns should only be made to allowed counterparties (following counterparty due diligence) and should be made to the VASP rather than the originator account (or wallet)
• Screening — should be done prior to initiating a transfer or making assets available to the beneficiary

It is clear that Hong Kong is committed to the global push for Travel Rule implementation to the FATF standards, similar to other countries that VerifyVASP has been very active in and meeting these standards and requirements. Do reach out to us; we will be happy to partner in your Travel Rule compliance efforts.