Produced by ｜Ouke Cloud Chain Research Institute
作宇｜Hedy Bi
Recently, the Hong Kong Securities and Futures Commission published on its official website "Circular to Licensed Corporations, SFC-licensed Virtual Asset Service Providers and Associated Entities - Updated Anti-Money Laundering/Terrorist Financing "Self-Assessment Checklist for Combating Money Laundering/Terrorist Financing", which further mentions blockchain analysis tools in the updated "Self-Assessment Checklist for Combating Money Laundering/Terrorist Financing". Specifically, the CSRC emphasized the importance of blockchain analysis tools in the "Continuous Supervision of Virtual Asset Transactions and Activities" section.
The SFC issued this letter to “establish a systematic and comprehensive framework for self-assessment of compliance with key anti-money laundering and countering the financing of terrorism requirements”. Compared with the version used in 2022, a new chapter K) Virtual Assets has been added.
来源：
https://apps.sfc.hk/edistributionWeb/gateway/EN/circular/aml/doc?refNo=23EC56
01
Blockchain analysis tool "tested successfully"
This is not the first time that the Hong Kong Securities and Futures Commission has proposed technology solutions for blockchain analysis tools.
Blockchain analysis tools have always been an essential compliance tool for virtual asset service providers internationally.Hong Kong regulatory authorities have also gradually realized its importance: since the beginning of this year, the Hong Kong Securities and Futures Commission has conducted a public inquiry on the "Consultation on Proposed Regulatory Requirements Applicable to Operators of Virtual Asset Trading Platforms Licensed by the Securities and Futures Commission" , this version does not mention blockchain analysis tools. In its recommendations, the Onchain AML technology solution of Onchain was used as an example to deeply analyze the on-chain world including on-chain transfers and interactions, and proposed that “financial institutions should adopt appropriate technological solutions (such as district Blockchain analysis tools) in order to track virtual assets and related wallet addresses and identify potentially suspicious transactions."
In June this year, the Hong Kong Securities and Futures Commission updated the "Consultation Summary on Proposed Regulatory Requirements Applicable to Operators of Virtual Asset Trading Platforms Licensed by the Securities and Futures Commission" added Appendix B - Virtual Assets Chapter 12, Blockchain Data Analysis Tools, is highlighted in the 134 new footnotes added in Chapter 12.7.3. Looking at the content of the "Self-Assessment Checklist for Combating Money Laundering/Terrorist Financing" updated by the China Securities Regulatory Commission on November 14, it can be seen that the China Securities Regulatory Commission hopes that virtual asset service providers will adopt regional Technological solutions such as blockchain data analysis tools help avoid money laundering risks in advance.
02
On-chain transactions, the focus of Hong Kong SFC
Virtual assets and on-chain transactions are innovative and highly complex, and their technical characteristics are significantly different from traditional financial products. This makes it difficult for traditional regulatory methods to be directly applied to the supervision of on-chain transactions. Therefore, the Hong Kong Securities and Futures Commission proposed a comprehensive regulatory framework in June this year, and paid special attention to "on-chain transactions" that are different from traditional financial products. Why is the Hong Kong Securities and Futures Commission concerned about on-chain transactions?
Large transfers prefer on-chain transactions
Large-value transactions usually involve higher risks, including risks of money laundering, fraud and market manipulation, which are the focus of supervision not only in traditional finance but also in the virtual asset market. Most large-value transfer transactions are not actually conducted on centralized trading platforms, but are completed between wallets. Transfers and transactions on the chain are often anonymous and censorship-resistant. This It will make supervision difficult.
According to data analysis on the browser on the Ouke Cloud Chain chain, in addition to the flow of funds in exchange accounts and the flow of funds between market makers (Market Maker Service) and exchanges, large transactions in personal accounts are mostly processed through the chain. Conducted on a decentralized exchange.
Money laundering crimes continue to escalate and evolve
Compared with traditional money laundering crimes, money laundering crimes using encrypted assets are more concealed and difficult to track. Anddue to its technical characteristics, it can play different roles in the three stages of money laundering crime - placement, cultivation and integration. In addition, there are criminals who steal the accounts of legitimate users and use them to launder money.
FATF mentioned in the "Money Laundering Using New Payment Methods" report that online payment methods are often used to launder illegal proceeds from fraud crimes based on identity theft, or to steal bank accounts, credit cards or debit cards through computer hacking, phishing, etc. The illegal proceeds of foreign-funded crimes; and using the anonymity of cryptocurrency to transfer these illegally obtained funds to places that cannot be traced. This is because most cryptocurrency transactions do not require face-to-face contact, which provides actors with the opportunity to abuse their legitimate accounts for money laundering.
03
On-chain anonymity vs on-chain transparency
Anonymity on the chain does not mean that it is difficult to supervise. Although blockchain technology brings anonymity and other characteristics, at the same time, the non-tamperability and public transparency of blockchain technology allow every transaction on the chain to be verified and traced on the blockchain. Transaction records are permanently recorded in the distributed blockchain network and are difficult to tamper with or delete. This allows regulators to more accurately track financial flows and look for suspicious transactions and money laundering.
Therefore,Blockchain analysis tools have become the best choice for the industry who want to efficiently interpret the data on the chain. By analyzing transaction patterns, address associations and fund flows, these tools can discover abnormal patterns and risk indicators, providing clues and decision support for regulators and virtual asset service providers.
Leung Fengyi, Chief Executive of the Hong Kong Securities and Futures Commission, talked about the Hong Kong Securities Regulatory Commission’s regulation of virtual assets for investor protection, and mentioned about the tools, “Use new technologies , there must be new risks, so we must try to minimize the risks and have new tools that can deal with new risks, so that we can enjoy the benefits that new technologies bring to financial services.”
As regulatory agencies and virtual asset service providers gain recognition and demand for blockchain analysis tools, there will be more investment and innovation in this area. For companies, entrepreneurs and even investors in other tracks, including retail investors, as the industry more actively explores and applies blockchain data analysis tools, it can alsobetter Understand and manage the risks of trading virtual assets. OKLink, for example, can provide a variety of tools to allow investors to understand transaction data and on-chain activities through simple operations. In this way, retail investors can Better assess a project's reliability and risk level so you can invest more prudently.
Use new tools to deal with new risks, and blockchain analysis tools have become a must-have. Only by using Hong Kong speed and prior risk management ideas can we effectively protect investors and promote the healthy development of Web3.