Financial Crime World

Hong Kong on Alert: Vietnam’s US$12 Billion Fraud Case and the Potential Movement of Illicit Proceeds

Amid growing concerns over financial crime and money laundering in Asia, the US$12 billion fraud case in Vietnam led by Ms. Truong My Lan and her associates has raised red flags about the potential investment of illicit proceeds in Hong Kong.

Concerns Over Undetected Corruption Proceeds

Vietnamese authorities have expressed concern over the fact that corruption proceeds are leaving the country undetected and being channeled into overseas investments, particularly in Hong Kong. The proceeds are believed to have been acquired through crimes and are now of interest to Hong Kong authorities.

Identified Assets in Hong Kong

Some reported assets acquired with illicit proceeds in Hong Kong include:

  • The US$819 million Nexxus Building in the Central District, sold by Chu Nap Kee in 2023
  • A hotel project in King’s Road
  • A commercial/residential site on Finney Street, Quarry Bay
  • A house on the Peak

Potential Enforcement Action

The Hong Kong authorities are urged to investigate Eric Chu Nap Kee and any associated funds and assets in the city. If investigated and found to be proceeds of crime, they can be subject to enforcement action under Hong Kong’s Organised and Serious Crimes Ordinance and the Drug Trafficking Recovery of Proceeds Ordinance.

##Previous Precedent: Macau Money Laundering Case

In a previous precedent, former Hong Kong resident Yeung Chun Pong and his associates were convicted in Macau of illegal bookmaking offenses. Their proceeds, estimated in the hundreds of millions, were laundered through Hong Kong. The Hong Kong police’s proactive and creative financial crime unit linked the proceeds to Macau with money laundering charges, demonstrating the necessity of acting on suspected money laundering, regardless of where the source crime occurred.

Urgent Action Needed

With the immense scale of the fraud committed in Vietnam estimated to account for up to 6% of the national GDP, it is crucial for law enforcement agencies and financial institutions to take decisive action. This situation constitutes a “Singapore moment” for Hong Kong authorities as a leading international financial center.

Impact on Financial Institutions

Financial institutions and other entities like property companies should review any funds or assets connected to Chu, his family, or associates, as they could potentially be the proceeds of crime.

Global Financial Crime System Credibility

The global financial crime system’s credibility and effectiveness demand prompt action from law enforcement agencies and financial institutions. Banks and financial institutions must act swiftly to demonstrate the effectiveness of their financial crime compliance policies and programs, highlighting their importance to the regulatory system.

Ongoing Investigation

The investigation is ongoing and extends beyond Hong Kong, with financial centers like Singapore also needing to look closely at funds and assets tied to this complex case, involving multiple jurisdictions, numerous banks, and a diverse range of investments.