Suspicious fund movements are pushing Hong Kong regulators to step up pressure on licensed firms, as criminals increasingly turn to brokers and virtual asset platforms for money laundering.
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A surge in rapid-fire transfers moving through Hong Kong’s licensed financial firms has triggered new urgency from regulators, who now warn that criminals increasingly exploit both securities brokers and virtual asset platforms to mask the origins of illicit funds.
The Securities and Futures Commission (SFC) issued a circular urging licensed firms to stay alert to patterns that suggest layering — the stage of money laundering where criminals attempt to obscure fund origins by passing money through multiple accounts.
SFC Flags Rapid Deposits and Withdrawals
The regulator noted a rising trend of deception and scam proceeds entering client accounts through a series of tightly timed deposits, often structured to avoid detection, before being withdrawn almost immediately as cash or virtual assets. The SFC says such behaviour signals attempts to hide both the source and the destination of criminal proceeds.
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The circular restates the SFC’s expectations on internal controls. Firms must monitor unusual movements, evaluate whether systems can detect rapid transaction cycles and ensure senior management remains accountable for preventing misuse.
“Watchfulness is key to detecting layering activities, which could have been prevented through effective and robust AML/CFT controls,” commented Dr Yip.
Eric Yip, Source: LinkedIn
“Licensed firms should stay alert to the red flags of suspicious transactions, while regularly assessing the robustness and effectiveness of their internal controls.”
The SFC has intensified cooperation with the Hong Kong Police Force, including the Anti-Deception Coordination Centre and the Joint Financial Intelligence Unit.
Since September 2025, several licensed firms have joined the police’s 24/7 stop-payment mechanism, which accelerates efforts to freeze suspicious funds before they disappear.
This collaboration has already produced results: in the past two months, roughly one-third of known scam-related proceeds attempting to pass through licensed firms were intercepted.
Industry Briefed on Market Risks
To reinforce expectations, the SFC held a webinar offering updates on supervisory findings and emerging AML/CFT risks across the securities and virtual asset markets.
The regulator intends to continue monitoring firms closely and has warned that it will take enforcement action when controls fall short. The SFC says it will keep supervising compliance and will intervene where firms fail to meet obligations.
The latest call reflects concern that Hong Kong’s role as a financial hub makes it a target for complex laundering schemes and that firms must do more to prevent becoming part of them.