Hong Kong Report Shows: Financial Crime is Up, but Crypto Isn’t Implicated

Amid searing debate over whether or not the city is taking adequate measures to prevent financial crime, the Hong Kong Financial Services and Treasury published its Money Laundering and Terrorist Financing Risk Assessment Report. The report revealed that while the number of individuals convicted for financial crimes over the past six years has decreased, the number of “suspicious financial transactions in Hong Kong has more than quadrupled” over the same amount of time.

Some believe that the rise could have been caused by 2012 legislation that mandated an increased number of financial organizations and entities to report “suspicious activity.”

However, Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term don’t seem to be implicated as one of the major factors contributing to the rise in suspicious financial activity. The Hong Kong Police Force stated that although cryptocurrency trading may be involved in Ponzi schemes, they see “no apparent sign of organized crime or ML/TF concerning the trading of cryptocurrencies.”

In fact, of the 167 Bitcoin-related reports of financial crime that the police have received since 2013, only a small number were related to drugs or other illicit activities. The rest had to do with ransomware; even then, most of those were related to the WannaCry virus.

More ‘Traditional’ Payment Platforms Much More Likely to Be Used for Illicit Activity

The report indicated that other digital payment platforms, like Paypal or Alipay, were much more likely to be used in illicit activities. A Forbes report said that the data supports the theory that “a system of payment only becomes a risk to money laundering and terrorist financing once it becomes relatively commonly used.”

Still, paranoia surrounding financial crime has caused firms in Hong Kong to have difficulty obtaining banking services. Banks are reportedly denying businesses access to service on a large scale because of fear about money laundering.

The increased paranoia around money laundering has hit Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term and cryptocurrency startups in Hong Kong particularly hard. “The difficulty of opening a bank account in Hong Kong tarnished the city’s reputation as a business and financial hub, and risked the government’s push to make the city a centre for fintech,” reads a report by the South China Morning Post.