Hong Kong’s SFC and Financial Reporting Council sign new memorandum, bringing virtual asset service providers and funds under financial reporting oversight
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AT A GLANCE
Hong Kong’s SFC and Financial Reporting Council sign new memorandum, expanding cooperation on financial reporting, compliance and audit oversight of virtual asset service providers and other entities.
Article
Hong Kong’s Financial Reporting Council and Securities and Futures Commission expand financial reporting and audit oversight to virtual asset service providers
PANews September 28 reported that the Hong Kong Securities and Futures Commission announced today that it and the Financial Reporting Council September 28 had signed a new Memorandum of Understanding, extending their regulatory cooperation beyond monitoring the financial reporting of listed entities and related audit work. The new memorandum covers the financial and compliance reporting of licensed corporations, virtual asset service providers licensed by the SFC, SFC-authorised funds and registered open-ended fund companies, as well as related audit and assurance work conducted by their auditors. The two parties also established a comprehensive framework for information sharing, case referrals, mutual assistance, and coordinated inspections and investigations related to regulatory matters of common interest.
The Hong Kong Securities and Futures Commission announced that it and the Financial Reporting Council had September 28 signed a new Memorandum of Understanding.
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The new memorandum extends their regulatory cooperation beyond monitoring the financial reporting of listed entities and related audit work.
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The scope includes the financial and compliance reporting of licensed corporations, virtual asset service providers licensed by the SFC, SFC-authorised funds and registered open-ended fund companies.
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The new memorandum also covers audit and assurance work conducted by the relevant auditors.
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The two parties established a framework for information sharing, case referrals, mutual assistance, and coordinated inspections and investigations.
AI-assisted interpretation
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Put simply, the two Hong Kong regulators have expanded the scope of their cooperative inspections. In addition to listed entities, the financial and compliance reporting of certain licensed institutions, virtual asset service providers and funds, along with related audit work, is also included in the cooperation framework.
Why it matters to readers
This means that the financial reporting, compliance reporting and audit work of the relevant entities will fall under a broader framework for information sharing, referrals, assistance and coordinated inspections between the two bodies.
Beginners can watch for the subsequent publication of specific filing requirements, implementation timelines and inspection methods; the available materials are not yet sufficient to assess the impact on specific virtual assets or the operations of specific institutions.
Risks and unknowns
The original text does not specify a detailed implementation timeline for the new arrangements.
The original text does not list the specific new reporting items, audit standards, or penalties.
The original text does not specify whether the arrangements will increase the actual compliance or audit costs of the relevant institutions.
The information was relayed by PANews, and the accompanying materials do not include the full text of the Memorandum of Understanding.
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Memorandum of Understanding
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