Hong Kong Strengthens Legal Framework for Banks to Share Data on Financial Crimes

Hong Kong has amended its Banking Ordinance to give financial institutions stronger legal backing to share information on suspected scams, money laundering, and terrorist financing—an upgrade regulators say will improve efficiency in tackling financial crime and reduce costly system disruptions caused by fraud.

The Banking (Amendment) Ordinance 2025 introduces a “safe harbour” provision that protects authorized institutions when exchanging data aimed at detecting or preventing prohibited conduct. Regulators expect the reform to encourage banks to take more proactive steps in flagging suspicious accounts and intercepting illicit funds.
Under the new framework, institutions will be able to share a broader range of information without fear of legal liability. Enhanced data sharing could also strengthen law enforcement efforts by providing police with stronger evidence to prosecute criminals exploiting Hong Kong’s financial system.

The amendment permits data exchange when banks observe activity indicating involvement in prohibited conduct. However, the thresholds are set higher than mere suspicion—a relatively low standard. Authorities have clarified that the new rules do not envisage unrestricted institution-to-institution (AI-to-AI) sharing in the absence of suspicious indicators.

The reform builds on the Financial Intelligence Evaluation Sharing Tool, launched in 2023 by the Hong Kong Monetary Authority (HKMA) in partnership with the Hong Kong Police Force and the Hong Kong Association of Banks. The platform has already facilitated more than 1,200 reports on suspicious corporate accounts.

Corporate accounts, however, represent only part of the issue. Roughly 90% of mule accounts—used to move and conceal criminal proceeds—are held by individuals rather than companies. To address this gap, the platform is now being upgraded to cover individual accounts, with the rollout expected later this year. Participation in the expanded system will remain voluntary.

Officials also acknowledge challenges with Suspicious Transaction Reports (STRs). Banks, wary of penalties for underreporting, often adopt a “defensive” approach by submitting reports whenever doubt arises. The government hopes the new framework will promote more targeted information sharing and generate higher-quality STRs—yielding intelligence that is actionable rather than merely compliant.

Together, the new ordinance and enhanced sharing platform aim to strengthen Hong Kong’s defenses against financial crime, while maintaining a balance between regulatory vigilance and operational efficiency across the banking sector.