Financial Crime World

Money Laundering in Hong Kong: A Look at Legal Authorities, Requirements, and Enforcement

In the bustling financial hub of Hong Kong, the issue of money laundering has long been a significant concern for authorities and financial institutions. This article provides an overview of the legal framework for prosecuting money laundering crimes, the regulatory requirements for businesses, and the enforcement strategies in place.

Money Laundering: Criminal Provisions and Enforcement

  • The Organised and Serious Crimes Ordinance (OSCO), Drug Trafficking (Recovery of Proceeds) Ordinance (DTROP), and the United Nations (Anti-Terrorism Measures) Ordinance (UNATMO) provide the legal foundation for prosecuting money laundering crimes.

Prosecution of money laundering offenses

  • The Department of Justice (DOJ) is responsible for prosecuting money laundering crimes.
  • Money laundering offenses involve dealing with property that represents the proceeds of indictable offenses, drugs, or terrorism.

Extraterritorial jurisdiction and responsible authorities

  • Yes, Hong Kong’s money laundering laws have extraterritorial jurisdiction.
  • Key authorities for investigating and prosecuting money laundering offenses include the HKPF, Customs and Excise Department, Joint Financial Intelligence Unit, and Independent Commission Against Corruption.

Corporate criminal liability

  • OSCO and the Interpretation and General Clauses Ordinance stipulate that “person” includes both corporations and unincorporated bodies.
  • Corporates are often not target prosecution subjects but may face seizure and search orders, as well as regulatory investigations and penalties.

Maximum penalties

  • The maximum penalty for individuals and corporations is a fine of HK$5,000,000 and imprisonment for 14 years.

Anti-Money Laundering Regulatory and Administrative Requirements

Regulatory requirements

  • The Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) imposes record-keeping and customer due diligence (CDD) requirements on financial institutions and designated non-financial businesses and professions (DNFBPs).

Additional requirements from self-regulatory organizations

  • Several self-regulatory organizations and professional associations impose additional requirements on their members.

Anti-Money Laundering Requirements for Financial Institutions and Other Designated Businesses

Financial institutions and designated businesses subject to requirements

  • Financial institutions, such as authorized banks, licensed corporations, authorized insurers, and licensed individual insurance agents, as well as designated non-financial businesses and professions, including accountants, estate agents, legal professionals, and trust or company service providers, are subject to anti-money laundering requirements.

Anti-money laundering and payment requirements

  • Money service operators providing remittance services are subject to anti-money laundering requirements.
  • Financial institutions may be exempt from these requirements if the remittance service is ancillary to their principal business.

Cryptocurrency industry and anti-money laundering requirements

  • The Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022 will soon introduce a licensing regime for virtual asset service providers and impose statutory anti-money laundering obligations on them.

Non-fungible tokens (NFTs) and anti-money laundering requirements

  • NFTs are not a distinct asset class in Hong Kong, so whether the anti-money laundering requirements apply depends on their nature and what they represent in token form.

As we continue to explore the world of money laundering in Hong Kong, remember that this information is meant to be a starting point and not an exhaustive resource. Stay tuned for further updates on this complex and crucial topic.