Financial Crime World

JFIU Annual Report 2012: Protecting Hong Kong from Money Laundering and Terrorist Financing

Title

The Joint Financial Intelligence Unit (JFIU) of Hong Kong, a collaborative effort between the Hong Kong Police Force (HKPF) and the Customs and Excise Department (C&ED), has published its annual report for 2012. The report underscores the unit’s commitment to identifying and preventing money laundering and terrorist financing activities, as well as its dedication to maintaining international standards and partnerships.

Mission and Vision

  • Vision: To remain one of the leading Financial Intelligence Units (FIUs) in the Asia-Pacific region.
  • Mission: Analyzing suspicious transactions, sharing intelligence, upgrading awareness, and collaborating with local and international agencies.

Review of the Year (2012)

  • Intgration of FATF Recommendations: The implementation of 40+9 Financial Action Task Force (FATF) recommendations resulted in enhanced AML measures and more flexibility in addressing low-risk areas. Hong Kong was removed from regular follow-ups to biennial updates.
  • Strengthening Money Laundering Preventive Measures: The Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (AMLO) improved Hong Kong’s money laundering preventive measures through stricter financial sector alignment and increased systematic customer due diligence (CDD), know your customer (KYC) measures, and record-keeping requirements.

Key Activities and Stakeholders

  • Intelligence Cultivation: Analyzing intelligence, formulating policies, and engaging in international cooperation.
  • Specialist Training: Providing expert training to improve the unit’s capabilities in handling complex money laundering and terrorist financing cases.
  • Outreach and Collaboration: Raising awareness through outreach activities, partnering with stakeholders in the financial sector and regulatory bodies, and engaging with FIUs and law enforcement agencies.

Suspicious Transaction Reporting (STRs)

  • Increase in STRs: JFIU received a record-high 23,282 STRs in 2012 - a 140% increase since 2008.
  • STREAMS Enhancement: The Suspicious Transaction and Report Management System (STREAMS) was scheduled to be enhanced by 2015, further improving its capacity to analyze and disseminate reports.

Case Examples and Typologies

Email Scams

Email scams targeted legitimate trading partners using emails as the primary method of communication. Swindlers deceived victims through technology and laundered proceeds through various channels, including changes in bank account details of goods suppliers. In 2012, over 70% of the bank accounts involved in email scams were corporate bank accounts based in Hong Kong.

Illegal Gambling Activities

Illegal gambling involved the conversion of criminal proceeds into funds held in gambling accounts, which were then laundered through various channels. These complex transactions and money flows complicated the detection and disruption of illegal gambling activities, making international cooperation and information exchange essential.

Conclusion

The JFIU’s annual report highlights its successful efforts in combating money laundering and terrorist financing activities in Hong Kong. By working closely with local and international partners, JFIU continues to protect Hong Kong’s financial system from criminal activities and remains committed to maintaining international standards and collaboration.