Hong Kong Develops Crypto Tracking Tool to Fight Money Laundering
The Hong Kong Customs and Excise Department has entered a partnership with the University of Hong Kong to develop a tool that could track cryptocurrencies in a bid to combat financial crime. This initiative stems from the increasing number of money laundering cases that involve the use of crypto assets to help strengthen digital age enforcement capabilities.
Mario Wong Ho-yin, assistant commissioner of the police force, revealed the project during a press briefing. He talked about the increasing sophistication of financial scams, which can be cross-boundary and involve virtual currencies. According to Wong, “These threats are global in nature and cannot be tackled by a single agency alone,” indicating the need for cooperation.
According to officials, the tool will support the identification of dubious flows of cryptocurrency, as well as aid in gathering evidence in criminal investigations. It is being developed by the National Crime Agency (NCA) for UK law enforcement. However, they did not share useful details of the system for security reasons. The University of Hong Kong has given technical aid in other forensic investigations and will also contribute its expertise in blockchain analytics to the endeavor.
Spike in Crypto-Fueled Money Laundering
Since 2021, authorities in Hong Kong have been investigating almost 40 major money laundering cases, including seven involving cryptocurrencies. The seven events were responsible for the suspicious proceeds of more than HK$9 billion (US$1.1 billion).
Over 1,000 suspicious crypto-related transactions totaling HK$1.8 billion linked to five companies and 18 local bank accounts were revealed. Police arrested three people, two of whom reportedly transferred HK$760 million using a crypto exchange.
To facilitate global cooperation, a three-day workshop involving law enforcement officers and consular representatives from eight countries, including India, Iran, New Zealand, and Singapore, was recently organized by Hong Kong Customs. The objective is to enhance border strategies and further coordination to counter crypto criminals.
A Model for the Region: The Tech Meets Regulation
The name of the tool has not yet been disclosed, but the project is similar to a blockchain analytics tool, “CryptoTrace,” introduced in the city’s Cyber Security and Technology Crime Bureau earlier this year by the same university. This platform will allow police to observe and map on-chain money movements, which officers on the line can use to get critical investigative intelligence.
Experts think that the new system might be a version of CryptoTrace developed for use in customs investigations. If it works, it could lead the way for similar regulatory technology in neighboring areas.
The University of Hong Kong’s dean of engineering, Professor David Srolovitz, said innovation and regulation must go hand-in-hand. Through the collaboration of engineers, regulators and law enforcement, systems can be built that combat today’s financial crimes.
Growing Global Scrutiny on Crypto Laundering
Due to money laundering concerns associated with the use of digital assets, Hong Kong’s announcement comes at the right time. Per an article on CryptoSlate, a recent TRM Labs report revealed that cops are using informal banking systems to shift money through crypto. These systems, particularly in China, have helped criminal groups, including international drug cartels, move funds, crypto, and fiat worth hundreds of millions.
The U.S. has recently charged Iurii Gugnin with laundering more than $530 million through the Evita Pay crypto payment platform, highlighting the urgent need to sanction Russian oligarchs. The case shows how digital financial crime is changing and that global enforcement tools must also change.
Balancing Innovation with Oversight
Hong Kong is striking a balance between developing fintech and compliance through regulatory measures. In April, the Securities and Futures Commission (SFC) permitted licensed platforms to offer crypto staking in a controlled manner, subject to strict safeguards. In May, the government passed the Stablecoin Bill, which required all fiat-referencing stablecoins to be licensed.
With the Stablecoin Ordinance coming into effect on 1 August 2025, Hong Kong is more committed than ever to regulating digital finance. The launch of a powerful crypto tracking tool is another measure towards making the city secure, compliant, innovative and the digital assets hub.
