HKMA Highlights AI, Data Sharing and Cross-Border Cooperation in Fight Against Digital Fraud
At the International Symposium on Digital Fraud Prevention and Detection hosted by City University of Hong Kong, Raymond Chan, Executive Director (Enforcement and AML) of the Hong Kong Monetary Authority (HKMA), outlined Hong Kong's latest strategies to safeguard the financial system amid accelerating digitalisation.
Rapid Digitalisation and Rising Fraud Risks
More than half of new bank accounts in Hong Kong are now opened online, and the Faster Payment System has reached 17.2 million registrations, more than double the city's population. Stored value facilities have also expanded rapidly, processing over 23 million daily transactions in early 2025. While these advances have brought efficiency and convenience, Chan warned they have also fueled a surge in fraud cases. In the first half of 2025, 20,800 deception cases were reported, though losses fell 21% year-on-year to HK$3.5 billion as banks improved detection.
Strengthening Early Detection and Intervention
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The HKMA has required banks to establish dynamic monitoring systems to identify scams and block mule accounts. These measures, combined with expanded use of police databases, lifted the fraud detection rate to 8.6% in 2025 from 2.9% a year earlier. Average victim losses fell by one third to HK$800,000. Supervisory reviews are now testing banks' systems to ensure effectiveness, with regulators sharing trends and best practices across the sector.
Harnessing AI and Data for Financial Crime Prevention
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Chan stressed the urgency of adopting advanced tools to match the speed of modern financial transactions. The HKMA is promoting artificial intelligence in anti-fraud and AML monitoring, with all major banks expressing plans to integrate AI into their frameworks. Over the next two years, the HKMA will support accelerated AI deployment in risk detection. In parallel, it is building an analytics platform to draw insights from transaction and account-opening data, improving early warning capabilities.
A landmark legal reform passed in June 2025 now allows banks to share information on suspicious personal accounts, which account for the majority of money mule activities. The HKMA expects this to transform sector-wide fraud prevention once operational later this year.
Addressing Risks from Digital Assets
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With the global digital asset market doubling to US$4 trillion in 18 months, Chan noted increasing cases of fraud, including fake token offerings and theft of wallet credentials. Hong Kong's new stablecoin regulatory framework applies proportionate AML standards, including strict customer due diligence and transaction monitoring. The HKMA intends to adjust these requirements as the sector evolves, in line with global regulatory dialogue.
Chan concluded that a more adaptive regulatory approach, wider use of AI, and deeper data sharing are essential to strengthening resilience against digital fraud. He called for continued collaboration among regulators, financial institutions, and international partners to build a financial system fit for the digital era.
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