Name
Global FinTech Guide
Country _ Name
Hong Kong
SectionTitle
RegTech and compliance management
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RegTech is composed of the words “regulatory” and “technology”. It is a collective term for the application of modern technologies, to get the increasing regulation in the banking- and financial sector under control both from an IT and a legal standpoint.

Introduction

Attitude of the country towards RegTech-services

Generally positive. For example, the HKMA promotes the adoption of RegTech in the AML/CFT space. The HKMA hosted its first AML/CFT RegTech Forum in November 2019. Since then, it has been engaged in a number of initiatives. For example, it has launched AML RegTech Lab (a collaborative platform for ongoing peer group sharing of operational, hands-on experience of RegTech approaches) and published a report titled 'AML/CFT Regtech: Case Studies and Insights', highlighting the opportunities that RegTech offers to transform the AML/CFT efforts, sharing end-to-end approaches which worked in real-life examples. In September 2023, 'AML/CFT Regtech: Case Studies and Insights Volume 2' was published.

HKMA published a circular dated 9 September 2024, encouraging Authorised Institutions ('AIs') to utilize the use of AI-powered systems for monitoring increasing risks of money laundering and terrorist financing in the current landscape.

Evidencing HKMA's methodical approach to advancing the adoption of AI, is the recent launch of the new Generative Artificial Intelligence ('GenAI') sandbox in collaboration with Cyberport, which enables banks to experiment with innovative AI solutions within a controlled and risk-managed environment. The Chief Executive of HKMA, Mr. Eddie Yue, also emphasized on the innovative approach in reshaping the fintech landscape in FinTech Week 2024.

The SFC is also actively exploring how RegTech and FinTech can further support the SFC and licensed corporations in achieving positive outcomes for markets in accordance with the relevant rules and standards. Some examples of the SFC's initiatives are:

  • Established a FinTech Contact Point in 2016, which is a centralised point of contact at the SFC for FinTech and RegTech innovation aiming at further enhancing communication with external stakeholders;
  • Launched an external expert committee, consisting of market practitioners, who have been guiding the SFC to understand the main trends of FinTech and RegTech; and
  • Launched an internal FinTech committee, for the deliberation of issues raised by FinTech or RegTech firms.
FSTB reciprocated the cross-agency collaboration by issuing the 'Policy Statement on Responsible Application of Artificial Intelligence in the Financial Market' on October 2024. This policy statement highlighted the high AI adoption rate in financial institution, 38% compared to global average of 26% and implementing a dual-track approach. This involves recognizing key application of AI including research, management, servicing, work automation etc., and outlining risk mitigation strategies.


Legal affairs

Obligations and requirements to provide RegTech-services

There are no additional requirements for the provision of RegTech services in Hong Kong. Companies are free to adopt new technology within the existing laws, rules, and regulations.

Additional comments regarding the legal situation for RegTech-services or what RegTech’s must be aware of in this business area

N/A


Economic conditions

Market size for RegTech-services and biggest companies in this business area

There is no publicly available information.

Additional comments regarding the economic situation for RegTech-services or what RegTech’s must be aware of in this busine

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