The Hong Kong Securities and Futures Commission urges licensed institutions to detect and prevent potential layering trading activities used for money laundering.

The Hong Kong Securities and Futures Commission issued a circular today (November 17) urging licensed corporations and virtual asset trading platforms (referred to collectively as "licensed institutions") to remain vigilant against suspicious fund transfers indicating layering trading activities to prevent money laundering. The Securities and Futures Commission pointed out in the circular that there is a rising trend of criminals using licensed institutions for layering trading activities, with some individuals attempting to disguise the source and destination of illegal funds to launder proceeds from fraud and deception cases. Common warning signs of layering trading activities involve a series of suspicious behaviors, including frequent, rapid, and organized deposits of funds into client accounts, followed by withdrawals in the form of funds or virtual assets. At the same time, the Securities and Futures Commission reiterated in the circular its strict standards expected of licensed institutions in detecting and preventing layering trading activities. To address the risks posed by the increasing trend of licensed institutions being used, the Securities and Futures Commission has strengthened cooperation with the Hong Kong Police Force (including the Anti-Deception Coordination Centre and the Joint Financial Intelligence Unit) and industry stakeholders, demonstrating a firm commitment to public-private cooperation. It is worth noting that since September 2025, some licensed institutions have agreed to cooperate with the existing "24/7 payment suspension mechanism" of the Anti-Deception Coordination Centre to expedite the interception of criminal proceeds and the recovery of related funds. In the past two months, approximately one-third of the proceeds of crime that flowed into licensed institutions and were confirmed to involve fraud and deception were successfully intercepted. In order to promote compliance with regulations aimed at combating money laundering and the financing of terrorism, the Securities and Futures Commission held a webinar today to outline the latest observations on monitoring the Hong Kong securities and virtual assets market and relevant regulatory measures to licensed institutions. Dr. Henry Yip, Executive Director of the Intermediaries Division of the Securities and Futures Commission, emphasized in his opening remarks at the webinar that licensed institutions (particularly their senior management) must safeguard their operations and the integrity of the Hong Kong financial system. Dr. Yip stated, "Maintaining a high level of vigilance is key to detecting layering trading activities, which can be prevented through effective and stringent controls against money laundering and terrorist financing. Licensed institutions should enhance their awareness of suspicious transaction warning signs and regularly assess the robustness and effectiveness of their internal monitoring measures." The Securities and Futures Commission will continue to monitor the compliance of licensed institutions with relevant regulations on combating money laundering and terrorist financing, and will take decisive regulatory or enforcement actions against licensed institutions that fail to fulfill their legal and regulatory responsibilities.