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    HKMA Announces FinTech Initiatives, Issues Regtech Adoption Guide

    October 31, 2022

    The Hong Kong Monetary Authority (HKMA), in collaboration with Invest Hong Kong, co-organized the seventh edition of Hong Kong FinTech Week in 2022. HKMA also published eighth issue of the Regtech Adoption Practice Guide, which focuses on regtech solutions that can help banks improve the efficiency of their sales suitability processes.

    As part of Hong Kong FinTech Week 2022, HKMA announced several initiatives to spur fintech development in Hong Kong:

    • Mule account network analytics.To prevent bank accounts from being abused for fraud and protect customers from financial crime losses, HKMA will apply anti-money laundering (AML) suptech tool, using granular data from multiple banks, to test how network analysis on mule accounts could assist in understanding how and where risks move across the banking sector.
    • Green bond tokenization. HKMA is piloting the issuance of a tokenized government green bond to test the use of distributed ledger technology to issue bonds in Hong Kong.
    • AML Regtech Labs (AMLabs). HKMA successfully hosted two AMLabs with Cyberport, with participation from 10 banks, technology firms, and data experts to explore network analytic tools as well as low-barrier, easy-to-implement technologies. HKMA will share insights from AMLab participating banks and their engagement with local tech firms through a publication in the coming weeks.
    • Central Bank Digital Currency (CBDC). HKMA published a report on wholesale CBDC and successfully conducted a pilot program under Project mBridge. On the retail front, after releasing a position paper on e-HKD in September 2022, HKMA has commenced work under the three-rail approach to prepare for the possible issuance of e-HKD in the future.
    • Commercial Data Interchange. HKMA announced that a proof-of-concept is in progress to study the feasibility of using digital corporate identity to support the consent process in commercial data interchange.
    • Cross-boundary fintech co-operation. HKMA has completed two pilot trials on cross-boundary account top-up and cross-border e-appointment for account opening, by leveraging the Greater Bay Area fintech pilot trial facility. There is a robust pipeline of pilots awaiting trial through the facility, including use cases related to cross-boundary account link-up and remote account opening.

    The Regtech Adoption Practice Guide focuses on regtech solutions that can help banks improve the efficiency of their sales suitability processes and fulfil the corresponding obligations amid the growing volume and complexity of the products sold. The document provides implementation guidance to help banks plan the adoption of regtech solutions for sales practices and suitability. The guide offers advice on how banks can use these regtech solutions to address the challenges associated with the processes of customer risk profiling, product due diligence, sales and advisory, and management supervision.

     

    Keywords: Asia Pacific, Hong Kong, Banking, Fintech, Regtech, AML, AMLAB, Suptech, CBDC, Cross Border Activities, Regtech Adoption Practice Guide, ML Risk, HKMA

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