TLDR

• HKSFPA warns CARF record-keeping rules could expose former officers to unfair risks
• Group urges clearer post-dissolution duties to prevent liability beyond company lifespan
• Low-activity firms may face heavy CARF compliance burdens without scaled exemptions
• HKSFPA backs admin penalties but warns against disproportionate fines from system errors
• Automation and API filing seen as key to easing CARF compliance pressure in Hong Kong

Hong Kong faces new pressure as the HKSFPA urges regulators to adjust key elements of the planned CARF regime. The association acknowledges the framework’s importance yet warns that several proposals could heighten operational risks. It argues that proportionate rules will support smoother implementation across the financial sector.

Record-Keeping Burdens Raise Compliance Concerns

Regulators continue shaping the CARF rollout, and the HKSFPA warns that current record-keeping rules may create unnecessary liabilities. The group supports the six-year retention period, yet it rejects duties that extend beyond corporate dissolution. Furthermore, it stresses that clarity is essential because prolonged responsibility could discourage senior roles in crypto-related firms.

Hong Kong still aims to align with OECD standards, but the HKSFPA says dissolved firms need defined record-handling arrangements. It proposes shifting records to licensed custodians, who can manage statutory duties without involving former officers. It argues that such transfers would reduce legal uncertainty and strengthen compliance outcomes.

The HKSFPA also notes that disconnection of former officers from storage systems would prevent open-ended obligations. This approach would reduce personal exposure and limit disputes over data control. It aligns with proposals raised by accounting and policy groups that support clearer obligations.

Registration Requirements Need Proportionate Adjustments

Hong Kong plans mandatory onboarding for RCASPs, yet the HKSFPA states that low-activity entities need lighter requirements. It says many private structures file nil returns and thus face unnecessary reporting layers.It recommends a simplified declaration system to maintain oversight while reducing administrative pressure.

Authorities continue expanding reporting coverage, but the HKSFPA argues that streamlined options could drive stronger compliance. Firms with minimal activity would operate more efficiently under a lite framework. Entities already registered under CARF could activate CRS registration through a simple portal function.

The HKSFPA maintains that proportional registration rules would prevent excessive operational work. It says fair competition would remain intact without penalizing firms with limited activity. This balance would also support broader participation across regulated markets.

Penalty Models and Filing Systems Require Practical Revisions

Hong Kong is reviewing enforcement tools, and the HKSFPA supports administrative penalties instead of criminal actions. It warns that per-account fines could produce disproportionate results for large platforms. It states that technical errors could trigger penalties despite good-faith efforts.

The association proposes a reasonable-excuse safeguard to reflect real-world reporting challenges. This measure would protect compliant firms that rely on valid client data. It argues that penalties should consider scale and fault severity.

Reporting systems are also under review, and the HKSFPA urges wider adoption of automated electronic filing. API and XML options would reduce errors and improve data consistency for high-volume firms. Additionally, it says testing environments must be available well before the system launches.

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