Financial Crime World

Money Laundering and Terrorist Financing: A Criminal Offense Under Hong Kong Law

In accordance with the laws of Hong Kong, money laundering and terrorist financing are criminal offenses that carry severe consequences. This article provides an overview of the relevant legislation and requirements related to these illegal activities.

Money Laundering

Money laundering is an offense as per sections 25(1) of the Drug Trafficking (Recovery of Proceeds) Ordinance (Cap. 405) and the Organized and Serious Crimes Ordinance (Cap. 455). A person is liable for this crime when dealing with property that they believe or have reasonable suspicion represents the proceeds of drug trafficking or an indictable offense.

penalties:

  • Fine: HK$ 5,000,000
  • Imprisonment: up to 14 years

For more information, please visit Hong Kong E-Legislation.

Terrorist Financing

The United Nations (Anti-Terrorism Measures) Ordinance (Cap. 575) regulates terrorist financing and prohibits providing or collecting property with the intention or knowledge it may be used for terrorism. This offense includes terrorists or associated individuals.

penalties:

  • Fine
  • Imprisonment: up to 14 years

Cap. 575 was fully implemented as of January 1, 2011. The Secretary for Security has the power to freeze the property of listed terrorists or persons connected with terrorism under Section 6 of Cap. 575. Failure to comply with freezing orders (sections 6(1) or 6(7)) may result in an offense under section 14. For more information, visit Explanatory notes of section 6 and section 14 or Hong Kong E-Legislation.

Reporting Suspicious Transactions

Under Cap. 405, Cap. 455, and Cap. 575, individuals are required to report knowledge or suspicions related to property associated with drug trafficking, an indictable offense, terrorist property, or connections to a terrorist act to an authorized officer as soon as practicable. Failure to report may result in a fine of HK$ 50,000 and up to 3 months’ imprisonment. For more information, visit Hong Kong E-Legislation.

Anti-Money Laundering and Counter-Terrorist Financing Ordinance, Cap 615

Since April 1, 2012, the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, Cap 615, has been enforced in Hong Kong to strengthen the territory’s anti-money laundering and counter-terrorist financing regime. This regulation aligns financial institutions and designated non-financial businesses and professions with international standards.

Learn more about Cap. 615 at Hong Kong E-Legislation.

Application for a ‘Letter of No Consent’ (LNC) from an authorized officer to continue dealing with property suspected to represent proceeds of crime or terrorist property can be made under sections 25A(2) of Cap. 455, Cap. 405, and sections 12(2) and (2A) of Cap. 575. Decisions on LNCs are made by the Joint Financial Intelligence Unit (JFIU).

Issuance of an LNC should be reasonable, necessary, and proportionate. Considerations for issuing an LNC may include:

  • Reasonable prospect of successfully obtaining a confiscation order
  • Likelihood of obtaining a restraint order or an injunction
  • Any other relevant factors

After an LNC is issued, the investigating unit should seek to obtain a restraint or confiscation order or request victims to apply for a civil injunction. An LNC usually lasts no more than six months, though exceptions may be made for complex or large-scale cases.

In conclusion, money laundering and terrorist financing are significant criminal offenses that require rigorous enforcement and prevention measures in Hong Kong. Relevant legislation, including the Drug Trafficking (Recovery of Proceeds) Ordinance, Organized and Serious Crimes Ordinance, and United Nations (Anti-Terrorism Measures) Ordinance, provides extensive provisions to combat these illegal activities. Understanding these laws and regulations is essential for businesses and individuals in the territory.