HKMA Cracks Down on Financial Crime: New Expectations for Banks Amid Rising Scam Risks

As scams, digitally-enabled fraud, and money laundering continue to challenge Hong Kong’s financial ecosystem, the Hong Kong Monetary Authority (HKMA) is significantly ramping up its supervisory and enforcement agenda. With over 44,000 deception cases recorded in 2024—an 11.7% increase from the previous year—the HKMA has made it clear: financial institutions must evolve their defences or face increasing regulatory pressure.

A Renewed Focus on Fraud, Scams and Cybercrime

The HKMA’s high-level regulatory roadmap for 2025 reflects the urgent need to combat rising financial crime threats, including:

• Authorised payment scams

• Cryptocurrency-related fraud

• Money muling activities

• Cross-border laundering networks

Banks are now expected to reinforce transaction monitoring frameworks, bolster public education initiatives, and embrace advanced technologies such as GenAI to identify hidden threats embedded in payment data.

“We will remain vigilant to emerging risks and provide guidance relating to the use of these technologies as appropriate,” said the HKMA.

Tech-Driven Supervision: From Hotlines to Machine Learning

Retail banks' anti-scam hotlines received over 24,000 verification calls in 2024 alone, demonstrating rising public concern. In response, banks have deployed stronger surveillance systems, introduced pre-transaction alerts, and supported initiatives like the “Money Safe” deposit segregation system to safeguard customer funds.

HKMA is also launching its own analytics platform, enabling cross-bank payment data analysis to detect undetected fraud and laundering trends. This effort is part of a broader shift toward a data-driven supervisory model.

Expanding Public-Private Partnerships (PPPs)

Collaboration remains a central pillar of the HKMA’s strategy. Key partnerships include:

• FMLIT (Fraud and Money Laundering Intelligence Taskforce): Now includes all major retail banks and six stored value facility (SVF) licensees.

• FINEST (Financial Intelligence Evaluation Sharing Tool): Facilitated over 432 intelligence reports since mid-2023.

• ADCC (Anti-Deception Coordination Centre): Enabled the blocking of HKD 1.48 billion in fraudulent payments in 2024.

These alliances have already yielded results: HKD 534 million in criminal proceeds were confiscated with support from public-private intelligence sharing.

Legislative Changes: Enabling Faster, Smarter Information Sharing

To accelerate detection and disruption of criminal activity, the HKMA is backing new laws to:

• Enable bank-to-bank sharing of personal account data under specified conditions.

• Introduce mechanisms for “pre-suspicion” information exchange, reducing delays in fraud response.

• Support faster confiscation of criminal proceeds through better intelligence alignment.

These changes reflect growing support for proactive prevention, rather than reactive enforcement.

Priorities for Risk, Fraud, and Compliance Teams in 2025

To keep pace with the HKMA’s expectations, TrustSphere recommends financial institutions prioritize the following actions:

1. Enhance Transaction Monitoring Capabilities

• Invest in AI/ML-driven tools to detect money muling, layering, and authorised push payment scams.

• Upgrade surveillance systems to generate high-quality, actionable suspicious transaction reports (STRs).

• Integrate internal systems with PPPs like FMLIT and FINEST to access real-time intelligence.

2. Strengthen Customer Due Diligence (CDD)

• Conduct enhanced due diligence (EDD) on high-risk clients, including those in virtual assets, trade finance, or remittance.

• Implement dynamic CDD reviews and improve assessments of source-of-wealth and beneficial ownership data.

3. Drive Scam Prevention Through Customer Education

• Launch campaigns targeting common scam types, such as romance, investment, and phishing scams.

• Reinforce pre-transaction alerts and integrate fraud risk messaging into banking apps and digital touchpoints.

4. Prepare for Aggressive Supervision

• Expect thematic inspections and increased scrutiny over AML/CFT frameworks, especially in digital banking and wealth management.

• Proactively address control gaps—especially in onboarding, crypto exposure, and suspicious transaction reporting.

5. Align with Emerging Crypto Regulations

• Monitor the rollout of the 2025 stablecoin licensing regime and update controls to align with evolving HKMA and SFC guidance.

• Assess exposure to crypto clients and ensure AML/CFT procedures reflect token-specific risks.

6. Commit to Public-Private Collaboration

• Participation in PPPs like FMLIT isn’t just good practice—it’s a strong signal of regulatory maturity and goodwill.

• Engage in knowledge-sharing forums and intelligence taskforces to stay ahead of criminal typologies and regulatory changes.

TrustSphere’s View: Strategic Collaboration Is the Future

In a region increasingly targeted by cross-border scams and digital financial crime, Hong Kong is setting the benchmark for intelligent, collaborative enforcement. For compliance officers, fraud managers, and banking executives, the message is clear: adopt a forward-looking, tech-enabled, and intelligence-driven model—or risk falling behind.

At TrustSphere, we work with institutions across Asia-Pacific to modernize fraud defences, implement intelligent transaction monitoring, and strengthen their engagement with regulators and public-private partnerships.