Financial Crime World

Hong Kong’s Money Laundering Regulators and Laws: An In-depth Look

Hong Kong, a financial powerhouse and global trading hub, boasts robust regulatory frameworks in place to combat money laundering and terrorist financing. In this article, we delve into the primary government entities responsible for enforcing Hong Kong’s money laundering laws and explain the offenses, defenses, and reporting obligations related to money laundering in this jurisdiction.

Which Government Entities Enforce Hong Kong’s Money Laundering Laws?

The Hong Kong Police Force (Police Force) and the Customs and Excise Department (Customs) are the leading authorities tasked with investigating money laundering activities. They enforce money laundering laws under the:

  1. Organised and Serious Crimes Ordinance (OSCO)
  2. Drug Trafficking (Recovery of Proceeds) Ordinance (DTROPO)
  3. United Nations (Anti-Terrorism Measures) Ordinance (UNATMO)

The Independent Commission Against Corruption (ICAC) comes into play when bribery or corruption facilitate money laundering offenses.

For potential breaches of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO), various authorities and professional bodies have jurisdiction. These include:

  • Securities and Futures Commission
  • Insurance Authority
  • Companies Registry

Hong Kong’s legal system, based on English common law, upholds the ‘one country, two systems’ principle. This means that mainland China’s laws do not generally apply to Hong Kong. As a result, there is no parallel money laundering offense at a provincial or state level.

Definitions

  • Both natural and legal persons can be prosecuted for money laundering, as per the definition of ‘person’ in Hong Kong legislation, which encompasses corporations.
  • Money laundering is defined as dealing with property while knowing or having reasonable grounds to believe that it represents proceeds of an indictable offense (OSCO and DTROPO), drug trafficking (DTROPO), or terrorist property (UNATMO).
  • Financial institutions or their employees and management may commit money laundering offenses under AMLO by willfully or intentionally contravening specified provisions.

Reporting Obligations

Any person, including professionals and financial institutions, who knows or suspects that property represents proceeds of an indictable offense, drug trafficking, or terrorist activities, must report it as soon as practicable to an authorized officer, typically the Joint Financial Intelligence Unit (JFIU). Failure to disclose can result in fines and imprisonment.

Restraint and Confiscation Orders

Restraint and confiscation orders are available under OSCO and DTROPO to prevent the dissipation or disposal of funds suspected of being involved in money laundering or proceeds of crime.

Financial institutions may receive ’letters of no consent’ from the JFIU to prevent them from dealing with funds in an account. The Hong Kong Court of Appeal has recently upheld the lawfulness of this consent regime.

Limitation Periods and Extraterritorial Reach

Extraterritorial Reach

Money laundering laws in Hong Kong have extraterritorial reach, as they apply to both Hong Kong citizens and non-citizens, regardless of where the predicate offense takes place. However, the offenses and reporting requirements apply only if the dealings occur in Hong Kong.

No Specific Time Limit

Regarding limitation periods, there is no specific time limit for commencing money laundering prosecutions under OSCO, DTROPO, and AMLO.