Hong Kong is actively developing tools and strategies to combat the rise of cryptocurrency-related money laundering. The Customs and Excise Department is partnering with the University of Hong Kong to create a digital tool specifically designed to track cryptocurrency transactions used in suspected money laundering schemes. This initiative comes in response to a notable increase in such cases, highlighting the need for advanced technology to address these complex financial crimes.
Assistant Commissioner Mario Wong Ho-yin stated on June 12, 2025, that customs officials would be increasing collaboration with academics, regional finance professionals, and law enforcement to counteract the increasingly complex and borderless nature of financial crimes. He emphasized that no single agency can tackle this problem alone, highlighting the necessity of a multi-faceted approach. While Wong Ho-yin did not disclose specific details about the tool's operation, citing confidentiality, the collaboration signifies a strong commitment to leveraging technology in the fight against illicit financial activities.
Between 2021 and May 2025, Hong Kong customs recorded 39 major money laundering cases, with seven involving cryptocurrencies. These cases often involve trade-based laundering operations, where illicit funds are disguised as routine transactions. One particular case involved over 1,000 suspicious transactions worth approximately $229 million, spread across five companies and 18 local bank accounts. In connection to the case, three individuals were arrested, with two accused of moving a substantial amount of money through a crypto platform.
In a separate but related development, the Hong Kong Police have launched CryptoTrace, a blockchain forensics tool developed in collaboration with the University of Hong Kong. Unveiled at the Blockchain Security Summit 2025, CryptoTrace is designed to enhance law enforcement capabilities in tracking and combating illicit cryptocurrency transactions and the rising tide of cybercrime. The Cyber Security and Technology Crime Bureau (CSTCB) led this initiative, aiming to provide advanced intelligence and investigative support for complex cases involving blockchain-based assets. CryptoTrace features advanced blockchain analytics, graph technology, and visualization tools. These tools enable investigators to trace laundered crypto funds across various wallets and chains, identify and geolocate suspects based on transaction behavior, and simplify investigations into scams on decentralized platforms.
The rise in crypto crime has prompted proactive measures, including training frontline officers in March 2025 to use CryptoTrace effectively. The CSTCB also emphasized that the CryptoTrace project is part of a broader mission to support the responsible development of the web3 ecosystem, working with industry stakeholders to build a safer and more sustainable environment. These efforts reflect Hong Kong's commitment to adapting to the evolving landscape of digital finance and addressing the challenges posed by virtual asset-related crimes.
These initiatives arrive in the context of increasing instances of cybercrime in the crypto space. In October 2024, Hong Kong police arrested 27 individuals involved in a $46 million romance scam that utilized AI-driven deepfake technology and a fake trading platform. This highlights the growing sophistication of cybercriminals and the urgent need for advanced tools like CryptoTrace. The combined efforts of the Customs and Excise Department and the Hong Kong Police, through tools like the crypto tracking tool and CryptoTrace, demonstrate Hong Kong's dedication to safeguarding its financial system and combating the misuse of cryptocurrencies for illicit activities.
