Financial Crime World

Hong Kong’s Battle Against Money Laundering and Terrorist Financing: A Legal Perspective

Hong Kong, known as one of the world’s major international financial hubs, has stringent laws in place to combat money laundering and terrorist financing. In this article, we provide an overview of the legal framework addressing these criminal offenses based on the information provided by the Joint Financial Intelligence Unit (JFIU).

Money Laundering

Money laundering and terrorist financing are criminal offenses under the following ordinances in Hong Kong:

  1. Drug Trafficking (Recovery of Proceeds) Ordinance (Cap. 405)
  2. Organized and Serious Crimes Ordinance (Cap. 455)

Offense & Penalties

A person commits money laundering if they deal with any property, including money, that they know or have reasonable grounds to believe is proceeds from:

  • Drug trafficking
  • Indictable offenses

The offense is addressed under sections 25(1) of both Cap. 405 and Cap. 455. Penalties include:

  • A fine of HK$ 5,000,000
  • Imprisonment for up to 14 years

For more information, visit the Hong Kong E-Legislation website.

Terrorist Financing

Ordinance & Offenses

Terrorist financing is addressed under the:

  • United Nations (Anti-Terrorism Measures) Ordinance (Cap. 575)

Persons providing or collecting property, intending or knowing that it will be used for terrorist acts, or making property or financial services available to terrorists or terrorist associates, are breaking the law.

Penalties

The maximum penalty for these offenses includes:

  • A fine
  • 14-year imprisonment

Upon full implementation in 2011, UNATMO also allowed the Secretary for Security to freeze terrorist property or that of connected persons. Non-compliance with freezing instructions is an offense, carrying a potential penalty of up to 14 years in prison.

For further details, consult the explanatory notes on sections 6 and 14 of Cap. 575 or the Hong Kong E-Legislation website.

Reporting Requirements

All the ordinances impose a legal requirement to report knowledge or suspicion of proceeds of crime or terrorist property. Any person who believes that property is proceeds of drug trafficking, an indictable offense, terrorist property, or connected to such activities should report to a JFIU officer as soon as practicable. Failure to do so may result in a fine of HK$ 50,000 and up to 3 months in prison.

Enhancements to the Regulatory Framework

The Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) came into effect in April 2012 and had subsequent amendments in March 2018. This ordinance aims to:

  1. Enhance Hong Kong’s anti-money laundering and counter-terrorist financing regulations
  2. Align financial institutions and designated non-financial businesses and professions with international standards

For more information on these and other sections of the legislation, visit the Hong Kong E-Legislation website.