Financial Crime World

Unmasking Financial Crimes in Hong Kong: A Comprehensive Q&A on Corporate Fraud, Bribery, Money Laundering, and More

Hong Kong, a thriving financial hub where business deals worth billions are made every day, necessitates being informed about potential financial crimes that could negatively impact businesses and individuals. This Q&A offers an in-depth overview of various financial crimes, their implications, and the regulatory landscape.

What is Financial Crime?

  • Financial crime includes corporate fraud, bribery, insider dealing, market abuse, money laundering, terrorist financing, breaches of financial/trade sanctions, and poor financial record keeping.

Corporate Fraud Offenses

  • Corporate fraud can take several forms.
    • False accounting
    • Misrepresentation
    • Deliberate concealment of important information

Bribery and Corruption

  • The Independent Commission Against Corruption (ICAC) is responsible for investigating and enforcing against bribery and corruption in Hong Kong.

Insider Dealing and Market Abuse

  • Consequences of insider dealing and market abuse:
    • Severe penalties, such as fines
    • Disqualification from acting as a company director
    • Criminal prosecution

Money Laundering

  • Money laundering is the process of converting illegally-gained proceeds into legitimate assets.
  • Under Hong Kong law, money laundering is a criminal offense under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance.

Terrorist Financing

  • Terrorist financing is providing monetary or material support to terrorist organizations.
  • It’s a criminal offense under the United Nations (Anti-Terrorism Measures) Ordinance.

Breaches of Financial/Trade Sanctions

  • Companies can protect themselves from breaching financial or trade sanctions:
    • Maintain a well-informed compliance program
    • Perform thorough due diligence on business partners
    • Seek advice from legal and financial experts when necessary

Cartels

  • A cartel involves independent firms or individuals agreeing to fix prices, rig bids, or allocate markets.
  • Such behavior is a criminal offense under Hong Kong’s Competition Ordinance.

Immunity and Leniency

  • Immunity: Protection from criminal prosecution in exchange for cooperation or disclosure of wrongdoing.
  • Leniency: Lenient treatment or reduced penalties for the first entity admitting involvement in a criminal offense.

Cross-border Cooperation

  • Cross-border cooperation is essential in combating financial crime as it allows:
    • Sharing of intelligence and resources among multiple jurisdictions
    • More effective investigations and prosecutions

Reporting Financial Crimes

  • Individuals can report suspicious activities anonymously to various regulatory bodies and law enforcement agencies.
  • Legal protection exists against discrimination, harassment, or victimization under the Whistleblowing Ordinance.

Managing Exposure to Corruption and Corporate Crime

  • Implementing a robust compliance program, enforcing a strict code of conduct, and engaging third-party experts for risk assessments and due diligence can help businesses manage their exposure to corruption and corporate crimes.