Laundering fear for banks

PUBLISHED : Monday, 22 March, 1993, 12:00am
UPDATED : Monday, 22 March, 1993, 12:00am
 

FEAR of lawsuits has prevented banks from reporting suspected drug money launderers, but some have kept track of suspicious transactions as officials await an appeal of a High Court decision which ruled the practice as violating the Bill of Rights.


The appeal at the Privy Council begins today when Senior Assistant Crown Prosecutor Mr Steve Bailey will argue for the restoration of Section 25 of the Drug Trafficking (Recovery of Proceeds) Ordinance.


Mr Justice Gall ruled last August that it contravened the Bill of Rights. Prior to the decision, the section made it an offence for anyone to help a drug trafficker to hold on to, retain or dispose of drug money, including banks.


An average of more than 30 reports per month were received by the Narcotics Bureau before the decision but, since August, under 30 reports have been received in total.


A senior police official estimated the amount of money which has flooded in since August was easily hundreds of millions of dollars.


Banking sources said some companies were still keeping track of suspicious transactions.


Banks had come under unfair criticism for not reporting the launderers, a bank official said, since they were bound to protect confidentiality.


Without a way to force banks to report suspicions, officials said they feared Hongkong would become a prime target for money laundering operations.


Calls have been made for alternative legislation, including one from the Secretary for Monetary Affairs, Mr Raymond Li Ling-chung, who suggested banks be made responsible for reporting suspicions.


Senior police and Legal Department officials have met to discuss potential options.


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