HKMA Launches Initiatives to Drive FinTech Innovation at Hong Kong FinTech Week 2024

Hong Kong FinTech Week 2024

The following is issued on behalf of the Hong Kong Monetary Authority:

The Hong Kong Monetary Authority (HKMA) today (October 28) co-organised Hong Kong FinTech Week 2024 with the InvestHK. The ninth edition of the city's flagship fintech event has attracted global participants to share innovative ideas, exchange fintech experiences and forge valuable business partnerships.

In his opening keynote, The Chief Executive of the HKMA, Mr Eddie Yue, highlighted the importance of embracing the digital frontier to drive the next phase of financial innovation. The HKMA also announced the following initiatives to spearhead the journey of fintech development in Hong Kong:

Accelerating Asset Tokenisation

The HKMA is driving innovation in financial market infrastructure (FMI) with Project Ensemble to accelerate the development of the tokenisation market in Hong Kong. To that end, the HKMA launched the Ensemble Sandbox, which supports tokenisation and CBDC initiatives within the HKMA, to explore tokenisation use cases, initially facilitated by tokenised deposits and central bank digital currencies (CBDC).

Internationally, the HKMA has established new cross-border partnerships with the Central Bank of Brazil and the Bank of Thailand to explore cross-border tokenisation use cases under Project Ensemble. As a founding member of the Linux Foundation Decentralized Trust, the HKMA will also collaborate with other members on interoperability aspects of Distributed Ledger Technology (DLT) financial market infrastructures, embracing open-source technology in the development of the Ensemble Sandbox.

The HKMA has completed the initial phase of six tokenisation use cases (see Annex I) across four main themes under Project Ensemble and will publish a report detailing the results of the experimentation in 2025. The Architecture Community has also added three new members (see Annex II), and four new participants (see Annex III) will begin experimenting with the Ensemble Sandbox on fixed income and investment funds use cases.

Building on the success of the two tokenised government green bond issuances under Project Evergreen, the HKMA is also taking the project to the next phase by introducing a series of measures to promote wider adoption of tokenisation in capital markets. One of these is the Digital Bond Grant Scheme, which will offer a maximum grant of HK$2.5 million for each eligible issuance, aiming to incentivise digital bond issuance in Hong Kong and cultivate the local digital asset ecosystem. The HKMA has consulted the industry and will announce detailed guidelines shortly.

Meanwhile, the HKMA has launched EvergreenHub, a knowledge repository where issuers, investors and other relevant market participants can reference the HKMA's experience and related materials on the technological, legal and operational aspects of digital bond transactions as they navigate bond tokenisation.

Breaking Down Boundaries for Payment

The HKMA is working closely with the People's Bank of China to establish a cross-boundary linkage between Hong Kong's Faster Payment System (FPS) and the Mainland's Internet Banking Payment System (IBPS). This linkage will support 24/7, instant, small-value, cross-boundary remittances using account proxies like mobile numbers. A pilot launch is expected to be around mid-2025 tentatively.

Unlocking Data Potential

The HKMA is driving the digital economy forward with Commercial Data Interchange (CDI), a next-generation data infrastructure that facilitates small- and medium-sized enterprise (SME) lending. To extend its reach, the HKMA is exploring a connection with the Land Registry by leveraging the CDI-CDEG (Note 1)linkage to enhance mortgage and loan assessments for both individuals and corporates in phases from 2025. The HKMA is also exploring pilots on cross-boundary credit referencing with Mainland credit reference platforms to enhance cross-boundary banking service offerings to SMEs.

To diversify data sources and enhance CDI's functions for corporate lending, the HKMA has partnered with the Airport Authority Hong Kong to share cargo logistics data on the Hong Kong International Airport Cargo Data Platform with consent. A proof-of-concept exercise is also underway to upgrade the Commercial Credit Reference Agency (CCRA)(Note 2)2.0, providing analytics insights for a more efficient SME lending journey.

The HKMA has also been actively participating in Project Aperta (Note 3), a cross-jurisdictional collaboration on open finance application programming interfaces (API) network, to reduce frictions and costs in global finance. Initial use cases will focus on trade finance for SMEs.

Empowering Banks to Go Fintech

Fintech Connect, Hong Kong's first cross-sectoral sourcing platform, is launched today to bridge financial institutions with fintech solution providers. This one-stop platform helps promote precise matching of supply and demand for fintech services, fostering collaboration and innovation. The HKMA, in partnership with Qianhai Authority, further enhances the platform by incorporating Qianhai-based fintech solution providers, fostering greater collaboration in the Greater Bay Area, and promoting mutual growth in the fintech ecosystem.

Following the second edition of the FiNETech series in August 2024, at which the Generative Artificial Intelligence Sandbox was launched, the HKMA will continue to work with the ecosystem stakeholders to organise additional FiNETech sessions in the coming months with the aim of further advancing the adoption of GreenTech and DLT.

In addition, the HKMA is introducing a sector-wide uplift programme to enhance banks' monitoring of complex money laundering cases and geopolitical risks through the use of artificial intelligence, supported by a joint event with Cyberport.

Mr Yue said, "As we approach the ninth edition of Hong Kong FinTech Week, the ecosystem has experienced remarkable growth and development in various aspects, with ongoing innovation consistently reshaping the fintech landscape. To further propel the growth of the industry, our financial sector must remain adaptable and open to new opportunities. We are committed to unlocking the full potential and advantage of fintech, and harnessing its power to drive sustainable growth of the ecosystem."

Note 1:Consented Data Exchange Gateway was developed by the Government with the aim of facilitating the interflow of data within the Government with data subject consent obtained.

Note 2: CCRA was launched by the HKMA in 2004 to collect information about the indebtedness and credit history of business enterprises for sharing such with lending institutes.

Note 3:Project Aperta is a collaboration between the Bank for International Settlements (BIS) Innovation Hub Hong Kong Centre, the Central Bank of the United Arab Emirates, the Banco Central do Brasil, the Financial Conduct Authority of the United Kingdom, the HKMA, the Global Legal Entity Identifier Foundation, the International Chamber of Commerce Digital Standards Initiative and the Hong Kong University Standard Chartered Foundation FinTech Academy.

Hong Kong FinTech Week 2024 Source: HKSAR Government Press Releases

Hong Kong FinTech Week 2024 Source: HKSAR Government Press Releases

Seven persons arrested during anti-illegal worker operation

The Immigration Department (ImmD) mounted an anti-illegal worker operation codenamed "Contribute" today (January 15).During the operation, ImmD Task Force officers raided premises under renovation in a newly built public housing estate in Sheung Shui district.A total of six suspected illegal workers and one suspected employer were arrested. Thearrested suspected illegal workers comprise six men, aged 22 to 41. Furthermore, one man, aged 45, suspected of employing the illegal workers, was also arrested. An investigation into the suspected employers is ongoing, and the possibility of further arrests is not ruled out.

Apart from mounting the enforcement operation, ImmD officers and a promotional vehicle have been deployed to distribute "Don't Employ Illegal Workers" leaflets and convey the message in the estate.

An ImmD spokesman said, "Any person who contravenes a condition of stay in force in respect of him or her shall be guilty of an offence. Also, visitors are not allowed to take employment in Hong Kong, whether paid or unpaid, without the permission of the Director of Immigration. Offenders are liable to prosecution and upon conviction face a maximum fine of $50,000 and up to two years' imprisonment. Aiders and abettors are also liable to prosecution and penalties."

The spokesman stressed that it is a serious offence to employ people who are not lawfully employable. Under the Immigration Ordinance, the maximum penalty for an employer employing a person who is not lawfully employable, i.e. an illegal immigrant, a person who is the subject of a removal order or a deportation order, an overstayer or a person who was refused permission to land, has been significantly increased from a fine of $350,000 and three years' imprisonment to a fine of $500,000 and 10 years' imprisonment to reflect the gravity of such offences. The director, manager, secretary, partner, etc, of the company concerned may also bear criminal liability. The High Court has laid down sentencing guidelines that the employer of an illegal worker should be given an immediate custodial sentence.

According to the court sentencing, employers must take all practicable steps to determine whether a person is lawfully employable prior to employment. Apart from inspecting a prospective employee's identity card, the employer has the explicit duty to make enquiries regarding the person and ensure that the answers would not cast any reasonable doubt concerning the lawful employability of the person. The court will not accept failure to do so as a defence in proceedings. It is also an offence if an employer fails to inspect the job seeker's valid travel document if the job seeker does not have a Hong Kong permanent identity card. Offenders are liable upon conviction to a maximum fine of $150,000 and to imprisonment for one year. In that connection, the spokesman would like to remind all employers not to defy the law by employing illegal workers. The ImmD will continue to take resolute enforcement action to combat such offences.

Under the existing mechanism, the ImmD will, as a standard procedure, conduct an initial screening of vulnerable persons, including illegal workers, illegal immigrants, sex workers and foreign domestic helpers, who are arrested during any operation with a view to ascertaining whether they are trafficking in persons (TIP) and/or forced labour victims. When any TIP and/or forced labour indicator is revealed in the initial screening, the ImmD officers will conduct a full debriefing and identification by using a standardised checklist to ascertain the presence of TIP and/or forced labour elements. Identified TIP and/or forced labour victims will be provided with various forms of support and assistance, including urgent intervention, medical services, counselling, shelter or temporary accommodation and other supporting services. The ImmD calls on TIP and/or forced labour victims to report crimes to the relevant departments immediately.

For reporting illegal employment activities, please call the dedicated hotline 3861 5000, by fax at 2824 1166, email to anti_crime@immd.gov.hk, or submit "Online Reporting of Immigration Offences" form at www.immd.gov.hk.

Seven persons arrested during anti-illegal worker operation Source: HKSAR Government Press Releases

Seven persons arrested during anti-illegal worker operation Source: HKSAR Government Press Releases