Hong Kong authorities remind banks not to be too hasty in rejecting digital asset clients

The Hong Kong Monetary Authority has released a reminder that virtual asset firms are entitled to banking services, despite their unfamiliarity and varying levels of risk.
Derek Andersen
Posted by Derek Andersen April 27, 2023 2 Mins Read
The Hong Kong Monetary Authority has released a reminder that virtual asset firms are entitled to banking services, despite their unfamiliarity and varying levels of risk.

One size does not fit all when it comes to Anti-Money Laundering (AML), the Hong Kong Monetary Authority (HKMA) reminded banks on April 27. Banks should not make it unnecessarily hard to open accounts. 

There has been a wave of companies opening bank accounts in Hong Kong to take advantage of business opportunities, HKMA Deputy CEO Arthur Yuen wrote, and “comments” about the difficulties in the process have ensued. Yuen tied the increased activity to the end of the pandemic.

While carrying out 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.”

On the contrary, the Hong Kong government has a policy of promoting the development of the virtual asset sector, and there is a regulatory framework in place to protect investors. While some virtual asset businesses pose higher AML risks than others, the Hong Kong banking industry will gain a better 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 released and that a roundtable would be held “for the banking industry and VASPs to exchange views” on April 28.

Related: Hong Kong court rules cryptocurrencies as property

Hong Kong is pushing to become a world crypto hub and is seen by some as the likely benefactor of the United States’ increasingly virulent anti-crypto crackdown. The region was the first jurisdiction in Asia to provide access to crypto exchange-traded funds. A proposal to license retail crypto exchanges is in its consultation period, and guidelines for exchanges are expected in May.

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