Hong Kong, June 12— In a bold move to combat rising financial crime in the digital age, Hong Kong Customs is collaborating with the University of Hong Kong (HKU) to develop a cutting-edge tool capable of tracing cryptocurrency transactions. The partnership aims to bolster the city’s defences against money laundering schemes that have increasingly exploited virtual assets.
Customs authorities revealed that seven out of 39 money laundering cases investigated between 2021 and May this year involved cryptocurrencies with more than HK$9 billion (US$1.1 billion) in suspected illicit funds flowing through these digital channels.
“These money laundering threats are characterised by a transnational and borderless nature, and no single agency can tackle this problem alone,” said Mario Wong Ho-yin, Assistant Commissioner for Intelligence and Investigation at the Hong Kong Customs and Excise Department, during a press briefing Thursday.
Tracking Crypto Crime Through Innovation
The announcement comes as authorities seek new ways to address the growing misuse of digital currencies for illegal trades and transactions. Hong Kong’s Customs Department has partnered with HKU’s School of Computing and Data Science to build a transaction tracing tool that will help investigators follow the complex, often opaque, flow of cryptocurrency-based funds.
Though details about the technology remain under wraps due to the sensitive nature of enforcement work, Wong confirmed that the partnership builds on prior successes with the university including the use of forensic software to detect illegal streaming of copyrighted content.
“This will help us fulfil the evidence requirements from the court [when handling these cases]. Without the University of Hong Kong’s technical advice, it would be difficult for us to do so,” he noted.
The new tracing system is expected to enhance the department’s ability to identify suspicious wallets, trace money trails across blockchain networks, and ultimately link illicit digital assets to real-world criminal enterprises.
Inside the Investigations: 1,000 Suspicious Transactions
Among the high-profile crypto-linked laundering cases cited by Wong was a 2023 bust in which three individuals were arrested for orchestrating more than 1,000 suspicious transactions totalling HK$1.8 billion. Authorities traced the activity to five companies and 18 local bank accounts, with two suspects accused of laundering HK$760 million through a cryptocurrency platform.
While such schemes often disguise illegal activity under the cover of legitimate trading, customs officials say they are becoming increasingly adept at identifying red flags especially with enhanced forensic capabilities now in development.
A Global Approach to a Global Problem
Wong emphasised that tackling crypto crime requires not only technological innovation but also international cooperation. “We will ramp up collaborations with academics, finance and virtual asset industry players, and law enforcement across the region,” he said.
In line with that strategy, Hong Kong Customs and HKU co-hosted a three-day workshop this week on anti-money laundering efforts involving digital assets. The event brought together law enforcement agencies and consular staff from eight jurisdictions, including mainland China, India, Iran, New Zealand, Thailand, and Singapore.
The workshop focused on evolving threats and challenges posed by crypto laundering, offering participants both technical insights and investigative training part of a broader initiative to build regional capacity in dealing with cross-border digital financial crime.
Rising Risk in a Rapidly Expanding Ecosystem
Professor Yiu Siu-ming, of HKU’s computing and data science school, warned that the risks posed by virtual assets would only escalate as adoption increased. “Different issues will arise when so many products emerge, but current laws and regulations are not necessarily comprehensive. Another factor to note is the safety of these platforms,” he said.
Professor Yiu’s comments echo growing concern among global regulators and academics alike that crypto markets are outpacing the development of legal frameworks and enforcement tools. Without action, this regulatory lag could leave the door open for greater abuse of decentralised financial systems.
Building a Safer Digital Economy
Hong Kong’s move to collaborate with academic institutions signals a proactive shift in strategy one that blends law enforcement experience with technical expertise. While the crypto landscape remains fraught with complexity, authorities hope that these new tools will not only improve investigation outcomes but also send a clear message to would-be offenders.
By investing in innovation and regional partnerships, the city is positioning itself at the forefront of Asia’s fight against crypto crime protecting both its financial infrastructure and its global reputation.
