Hong Kong’s expansion of its bullion market will create new channels between international financial markets, mainland Chinese demand for gold, and yuan-based settlement mechanisms – and so should present significant commercial opportunities for global businesses.

However, this development will also increase risks related to sanctions, financial crime, regulatory conflict, and operational disruption, meaning that boards of foreign-owned firms should ensure that the appropriate controls are in place before the market reaches scale.

SVA can advise companies on how best to mitigate risk, especially by providing reliable intelligence in connection with sanctions and compliance issues.

The global bullion hub

The Hong Kong’s government has set out ambitious plans to expand its role in the global precious metals market.

In July 2026, Hong Kong’s Financial Secretary Christopher Hui Ching-yu (許正宇) announced the establishment of the Hong Kong Precious Metals Central Clearing Company (“PMCCC”), a new entity intended to support clearing and settlement of over-the-counter gold transactions in Chinese yuan.

Bank of China helped develop the PMCCC, and a range of major international financial institutions are reported to be participating, such as Citibank, HSBC, JPMorgan Chase, Standard Chartered, and UBS.

The PMCCC will work alongside the Delivery Connect system, a two-way physical gold transfer mechanism between Hong Kong and Shanghai. Hong Kong’s government will also expand vaulting capacity from about 200 metric tonnes at present, to more than 2,000 tonnes by 2030. It is also considering plans for the creation of Chinese yuan-denominated gold futures, and has launched a new HAU ticker for gold in Hong Kong.

The policy seeks to position Hong Kong as a “super-connector” in bullion trading, at the same time as bolstering yuan-denominated settlement mechanisms, and reducing China’s reliance on US dollar-based market structures.

A changing market

Hong Kong is capitalising on the increasing fragmentation of the gold market, driven in recent years by Russia’s invasion of Ukraine, changes to refining and trading practices, and worsening geopolitical tensions.

In 2022, a good deal of gold trading shifted to Dubai, after the London Bullion Market Association prohibited dealing in Russian gold.

Now, the Iran conflict, and associated interruptions to air cargo services, have raised uncertainties about the vaulting of gold in the United Arab Emirates and elsewhere in Middle East, prompting greater interest in alternatives such as Hong Kong or Singapore.

Some reports have even claimed that gold re-routed from Dubai is being sold at material discounts, to the benefit of Chinese buyers.

Beijing’s backing

The establishment of the PMCCC is illustrative of how integrated Hong Kong has become into broader national policies.

Beijing launched its Golden Road Strategy (黃金走廊) in 2019, operating through the Shanghai Gold Exchange. In 2025 nine Chinese government entities reportedly announced a redesignation of gold from a “strategic mineral” to a “cornerstone of financial and industrial security”.

Beijing has since advanced its Golden Road Strategy with plans for a network of precious metals vaults, and a system of gold-trading linked to the Chinese yuan. Hong Kong is the first such hub, with others mooted in places such as Dubai, Riyadh, Kuala Lumpur and Moscow.

These actions point to a push by China to exert greater influence over the global precious metals markets, to broaden yuan-based trading and settlement systems, and to reduce the geopolitical and financial risks of reliance on the US dollar.

Beijing’s actions thus neatly echo the Chinese adage: “buy gold in times of chaos, buy property and antiques in prosperous times” (乱世买黄金，盛世买房子/藏古董).

Sanctions exposure – the Russia Problem

This market shift presents real opportunities to many companies – but it also underlines the critical importance of reliable intelligence on sanctions, financial crime, and counterparty risk.

After all, precious metals can be used to monetise assets, protect value, settle cross-border trade, and, in some cases, to obscure the origin of funds. Bullion transactions that involve complex networks of intermediaries, opaque ownership structures, and weak or forged documentation can present acute risks to counterparties – even years after a transaction.

Moreover, US enforcement actions have clearly identified how Russian businesses have carried out gold sales in Hong Kong or China, often operating through third-country trading companies and non-traditional payment channels to circumvent sanctions.

In June 2024, the US Treasury’s Office of Foreign Assets Control (“OFAC”) listed entities in Hong Kong, such as Holden International Trading Limited, Taube Precious HK Limited, and VPower Finance Security Hong Kong Limited (alongside the UAE’s Dubai Multi Commodities Centre), as connected to bullion transactions with sanctioned Russian miner Polyus.

International companies participating in this promising market, then, will have to navigate potentially conflicting regulations under the US, British and European Union (“EU”) sanctions regimes, as well as Chinese countermeasures or blocking statutes.

Local companies face a different set of sanctions risks, but may yet find themselves vulnerable thanks to links through ownership structures, insurers, correspondent banks, shippers, or other counterparties.

As such, independent and reliable intelligence, separate from legal advice, will be critical in managing risks. This is one of SVA’s core capabilities.

Other issues

Money laundering and trade-based financial crime risks are an additional concern, given that the trading of gold can introduce opacity into transactions – particularly when combined with cryptocurrency use. Market-based fraudsters may also seek to game the system, just as they do in securities frauds, while correspondent banks could transmit such risks across the global financial system.

A further threat is operational. Firms may need to examine whether a centralised clearing mechanism will reliably complete transactions, provide access to collateral, or allow the movement of bullion at times of financial stress or cyberattack.

Scenario planning in that context should take account of the impact of transport interruption, port or airspace restrictions, communications outages and other deterioration in regional security arising from a prospective Taiwan or South China Sea conflict.

Physical security is a final concern. Growing holdings of gold in Hong Kong are likely to attract criminal attention, which will intensify risks related to physical security, theft, insider threat, robbery, cargo security, and kidnap-related scenarios; that said, Hong Kong has a stable and effective law enforcement regime.

What executives should do now

Companies should pre-empt such risks before the market reaches scale, by enhancing due diligence and intelligence gathering on traders, beneficial owners, vault operators, insurers, logistics providers, and particular payment entities.

Boards will need to ensure that sanctions-screening mechanisms operate effectively, with regard to ownership and control, related parties, adverse media, indicators of evasion of sanctions, and jurisdictional overlap.

Boards should also stress test the procedures for escalation, placing transactions on hold, or ending client or counterparty relationships. SVA can assist by independently designing programmes to deal with such risk.

Companies that handle related financial transactions, such as banks, wealth and asset managers and professional service providers, will need to bolster anti-money laundering protections. Identifying the source of funds and establishing provenance and chain-of-custody checks for bullion transactions will be especially important.

General counsels may need to take such risks into account when examining regulatory exposures across Hong Kong, mainland China, the US and the EU. In some cases, boards may examine whether the siloing of business lines, legal entities, personnel and data arrangements could better suit what is becoming an ever more fragmented regulatory environment.

Executives should also test operational resilience for the disruption of clearing, settlement, insurance, logistics and cyber systems, just as they would consider how an outage of any trading platform might affect their business.

Finally, security teams should review physical security measures, as relevant.

Opportunities and threats

Hong Kong’s ambitions in the gold market should generate substantial opportunities for businesses that can navigate a more fragmented regulatory and financial landscape.

The firms best placed to benefit will be those that effectively combine intelligence, political risk, due diligence and compliance mechanisms with commercial agility.

SVA helps businesses identify and investigate counterparty risk, political risk, assess sanctions and financial-crime exposure, and establish proportionate controls that mitigate complex, cross-border risks in the Asia-Pacific region, and more broadly.

SVA

SVA (www.stevevickersassociates.com) is an independent, specialist risk mitigation, corporate intelligence and risk consulting company.

The firm serves financial institutions, private equity funds, corporations, high net-worth individuals and insurance companies and underwriters around the world.

If you seek to protect your business’ interests, please do not hesitate to contact us at the numbers below. We can be of assistance to your organisation in handling these complex issues.