Wu Jiezhuang: Hong Kong will establish a licensing system for OTC and require OTC to comply with anti money laundering and KYC regulations

According to a report by Wen Wei Po, Hong Kong Legislative Council member Ng Kit chung stated that Hong Kong's cryptocurrency regulation will usher in a new mechanism this year. The SAR government will establish a licensing system for over-the-counter (OTC) cryptocurrency trading and require OTC to comply with the anti money laundering (AML) and customer due diligence (KYC) requirements of the Anti Money Laundering Ordinance. In addition, the licensee can only conduct spot transactions between virtual assets and legal tender, and is required to register and monitor business wallets and transaction records. As a regulator, the Commissioner of Customs is responsible for approving licenses, conducting routine inspections, investigating violations, and imposing penalties. Violators can be fined up to HKD 1 million or imprisoned for two years. In terms of KYC authentication, the SAR government suggests verifying customer identity, evaluating and recording customer transaction purposes and nature, and continuously monitoring transaction activities.