Hong Kong

Hong Kong Customs detects ML case involving HK$4.3 million following narcotics investigation

Two persons suspected of dealing with drug trafficking proceeds have been arrested by Hong Kong Customs, following a dangerous drugs case detected in May 2022 where three men were arrested for ML of approximately HK$4.3 million (≈US$547,795). A person who deals with any property knowing or having reasonable grounds to believe that such property in whole or in part directly or indirectly represents any person's proceeds of an indictable offence commits an offence under the Organized and Serious Crimes Ordinance and faces a fine of HK$5 million (≈US$636,971), 14 years' imprisonment and confiscation of the proceeds of crime. [16 Sep 2022]

Hong Kong Customs smashes ML syndicate and detects ML case involving over HK$400 million

An operation codenamed "Moon Shadow" has been mounted by Hong Kong Customs, terminating a money laundering syndicate. Four men suspected to be connected with the case have been arrested. This comes after the detection of a money laundering case following the arrest of one man and one woman at the end of 2021. Following an in-depth investigation and fund flow analysis, Hong Kong Customs later discovered that three local men had opened 64 personal accounts at various local banks (including virtual banks) within one year since October 2019. It was found that between 2019 and 2021, they made over 9,000 suspicious transactions involving HK$411 million (≈US$50.96 million) in total. [1 Sep 2022]

Five charged with bribery linked to construction of Hong Kong airport’s third runway

Five people have been charged by the Independent Commission Against Corruption (ICAC) for soliciting and accepting illegal rebates totalling over HK$200,000 (≈US$25,480) in relation to the construction of Hong Kong airport's third runway. The bribes involved accepting illegal rebates for helping workers secure their employment with MLife Engineering Limited, a sub-contractor of the third runway construction project. A total of 13 people have also been charged by the ICAC in connection with the investigation. [31 Aug 2022]

HKMA fines bank for AML lapses

The Hong Kong Monetary Authority (HKMA) has imposed a HK$6 million (≈US$765,000) fine on the local branch of a bank for breaching AML laws. This disciplinary action follows an investigation into the bank by Hong Kong de facto's central bank. It was found that the bank had failed to carry out the required checks on 17 customers before establishing business relationships with them between April 2012 and June 2016. [30 Aug 2022]

Hong Kong ex-police officer jailed for 21 months for ML and soliciting illegal loans

The Eastern Magistrates' Courts have sentenced a former police officer, Au Kar-man to 21 months in jail for ML and soliciting advantages. She pleaded guilty to two counts of conspiracy to deal with property known or believed to represent proceeds of an indictable offence and two counts of a prescribed officer soliciting an advantage in two separate cases. Au used to work in the Eastern District’s investigation team and between January 2020 and May 2020, she was accused of soliciting loans with a value more than HK$1 million (≈US$127,402) on two occasions. [19 Aug 2022]

Key takeaways from Hong Kong's ML/TF/PF Risk Assessment 2022

The Hong Kong government published its second ML/TF risk assessment report in July 2022, providing an overview of ML, TF and proliferation financing (PF) risks in Hong Kong. The report acknowledges the significant developments in digital financial technologies which has been partially accelerated by Covid-19 and identifies key stakeholders involved in coordinating and implementing the AML/CTF regime. It also sets out the key areas of work moving forward, which includes enhancing the AML/CTF legal framework in Hong Kong, strengthening risk-based supervision and partnerships, sustaining outreach and raising awareness, monitoring new and emerging risks, and strengthening law enforcements efforts. [Jul 2022]

China

Official sentenced to death for corruption involving 3b yuan

The Intermediate People's Court in the Hinggan League region of Inner Mongolia has sentenced Li Jianping, a former senior Party official in the economic and technological development zone in Hohhot, to a death sentence for bribery, with a suspended death sentence for bribery, life imprisonment for embezzlement and a five-year prison term for engaging in organised crime. The court ultimately decided to give Li the death penalty. [29 Sep 2022]

Chinese police expose multi-billion crypto ML scheme

Law enforcement agents in China have broken up a multi-billion dollar money-laundering ring allegedly involved in laundering approximately US$5.6 billion using cryptocurrencies. The Chinese authorities have arrested 93 individuals who were allegedly involved in the scheme, raided ten different physical sites, confiscated over 100 electronic devices and frozen approximately US$42 million under Operation Hundred-Day Action. The suspects, if found guilty, face a ten year prison term and stiffer punishments could be imposed given the country's current negative stand on crypto. [29 Sep 2022]

SEC charges two Chinese executives with insider trading

The executives of Cheetah Mobile Inc. have been charged by the US Securities and Exchange Commission (SEC) with insider trading for selling its securities through a trading plan that withheld a material negative revenue trend. The SEC order stated that the company's CEO, Sheng Fu and the then president and Chief Technology Officer jointly established a purported 10b5-1 trading plan after becoming aware of a significant drop in advertising revenues from the company’s largest advertising partner. As a result, they incurred insider trading liabilities because they were in possession of material non-public information when they entered into the trades. The two officers have agreed to cease-and-desist orders in undertakings relating to their future securities trading and to pay monetary penalties. [22 Sep 2022]

Bank of East Asia executive detained on bribery charge

The Executive Vice President and Head of Northern China of Bank of East Asia (China) (BEA), Chen Zhiren has been detained on suspicion of accepting bribes. According to BEA, the matter pertains solely to the personal actions of an individual employee and it has stringent internal control mechanisms and protocols in place. This follows a drive that was launched in 2021 by President Xi Jinping to root out corruption in the financial sector. To date, the drive has resulted in the arrest of more than 40 officials and executives, including bank presidents, and senior market and exchange regulators. [13 Sep 2022]