Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

Hong Kong Central Bank flags blockchain money-laundering risk

Kareyst Lin | Nov. 14, 2016
HKMA aims to produce a second report with more in-depth analysis

The anonymity afforded by blockchain technology may facilitate illicit activities such as the trafficking of criminal gains, the sale of illegal goods and ransom payments, said Hong Kong Monetary Authority (HKMA) in a study on the technology released on 11 November 2016.

While the report highlighted blockchain's cost and timesaving qualities, the technology predicated on a shared network of transaction records also offered legal, risk management and regulatory issues.

Distributed-ledger technology "offers good potential, but a lot of things need to be addressed," said Shu Pui Li, HKMA's Executive Director for Financial Infrastructure. "The most painful issue is legal. A lot of legal issues."

Banks around the world are currently research on blockchain for use in areas such as trade finance and mortgages, as they try to trim expenses and boost profitability, a Bloomberg report said on 11 November 2016.

Blockchain could reduce banks' infrastructure costs worldwide by US$15 to US$20 million a year by 2022, according to law firm White & Case.  

However, it was too early to make any definite conclusions about distributed ledgers, said Li.

HKMA is aiming to produce a second report with more in-depth analysis. 

 

Sign up for CIO Asia eNewsletters.