Suspicious fund movements are pushing Hong Kongregulators to step up pressure on licensed firms, as criminals increasinglyturn to brokers and virtual asset platforms for money laundering.Join IG, CMC, and Robinhood in London’s leading trading industry event!A surge in rapid-fire transfers moving through HongKong’s licensed financial firms has triggered new urgency from regulators, whonow warn that criminals increasingly exploit both securities brokers andvirtual asset platforms to mask the origins of illicit funds.The Securities and Futures Commission (SFC) issued acircular urging licensed firms to stay alert to patterns that suggest layering— the stage of money laundering where criminals attempt to obscure fund originsby passing money through multiple accounts.SFC Flags Rapid Deposits and WithdrawalsThe regulator noted a rising trend of deception andscam proceeds entering client accounts through a series of tightly timeddeposits, often structured to avoid detection, before being withdrawn almostimmediately as cash or virtual assets. The SFC says such behaviour signals attempts to hideboth the source and the destination of criminal proceeds.The circular restates the SFC’s expectations oninternal controls. Firms must monitor unusual movements, evaluate whethersystems can detect rapid transaction cycles and ensure senior managementremains accountable for preventing misuse.“Watchfulness is key to detecting layering activities,which could have been prevented through effective and robust AML/CFT controls,”commented Dr Yip.“Licensed firms should stay alert to the red flags ofsuspicious transactions, while regularly assessing the robustness andeffectiveness of their internal controls.”The SFC has intensified cooperation with the Hong KongPolice Force, including the Anti-Deception Coordination Centre and the JointFinancial Intelligence Unit.Since September 2025, several licensed firms havejoined the police’s 24/7 stop-payment mechanism, which accelerates efforts tofreeze suspicious funds before they disappear.This collaboration has already produced results: inthe past two months, roughly one-third of known scam-related proceedsattempting to pass through licensed firms were intercepted.Industry Briefed on Market RisksTo reinforce expectations, the SFC held a webinaroffering updates on supervisory findings and emerging AML/CFT risks across thesecurities and virtual asset markets.The regulator intends to continue monitoring firmsclosely and has warned that it will take enforcement action when controls fallshort. The SFC says it will keep supervising compliance andwill intervene where firms fail to meet obligations.The latest call reflects concern that Hong Kong’s roleas a financial hub makes it a target for complex laundering schemes and thatfirms must do more to prevent becoming part of them.This article was written by Jared Kirui at www.financemagnates.com.