Jake's View

Hong Kong dances to the money laundering tune

Draconian laws allow our authorities to convict supposed launderers without evidence of a crime – and all to please a European agency

PUBLISHED : Thursday, 20 March, 2014, 12:50am
UPDATED : Thursday, 20 March, 2014, 12:50am

The [Financial Action] Task Force recognised Hong Kong's efforts and agreed unanimously among members in October 2012 to remove Hong Kong from its "follow-up process" in its regular mutual evaluation.

Successful conviction of recent cases shows our determination and efficacy among law enforcement agencies and financial regulators in combating money laundering.

Jackie Liu,
principal assistant secretary for financial services,
Letters to the editor, March 19

Let us set this in proper perspective as what we have here is actually a story of rank injustice inflicted on innocent members of the public by craven bureaucrats pandering to a European watchdog of capital flows.

That watchdog, the Paris-based FATF, an intergovernmental agency set up in 1989 to police money laundering, baldly confesses on its own website to setting itself above its masters - "The FATF … works to generate the necessary political will to bring about national legislative and regulatory reform …"

In other words, "No, you national governments, even you mere voting members of the general public, shall not tell us what to do. We shall tell you. Shut up and listen."

But this arrogant body does swing a club. By declaring any jurisdiction non-compliant with its edicts it has so far been able to hinder bank transfers between Europe and that jurisdiction. European bank regulators run scared of FATF.

Looking guilty of a crime is enough to be sent to prison if it involves any money transfers

This means that we in Hong Kong have to watch our step or find our standing as a financial centre impaired. In its 2008 review, FATF did indeed say we were not quite up to the mark - "the number of confiscations is relatively low". FATF's measuring stick is convictions, however achieved.

Fortunately we have at hand the perfect tool to bring ourselves up to this dubious standard and by vigorous use of it we "aligned" ourselves in the 2012 review.

This tool is a law that says the prosecutor does not have to prove any underlying crime to prove money laundering. All he need do is show that the accused handled money in a way that might make a reasonable person think he was laundering it.

Bizarre, yes. Looking guilty of a crime is enough to be sent to prison if it involves any transfers of money. No actual crime need be proven. Our colonial lawmakers wrote a fundamental premise of civil rights right out of the law books.

That word "reasonable", since you asked, for all effective purposes means reasonable to barristers, people who have little familiarity with commerce.

Now shift the scene. Some years back our government signed a border opening agreement with Beijing, the Closer Economic Partnership Arrangement.

It has been a complete flop. Mainland interests have effectively free entry to Hong Kong but the border remains closed to Hong Kong interests in key professions and financial sectors.

However, an underground financial system has evolved to make up for the failure so that commercial relations can continue efficiently across the Pearl River Delta. A substantial part of this system involves cash transfers by unofficial couriers to Hong Kong banks.

The authorities on both sides of the border officially frown on this, and cannot recognise it, essential grease though it is to the wheels of commerce. But, for our purposes, it also has all the appearances of money laundering.

How convenient. A steady string of ordinary working people who have done nothing wrong other than carry cash across the border, which is not a crime in Hong Kong, can be marched off to prison on long sentences because it is now easy to make them look guilty of more heinous crimes.

Bear in mind that none of this has to do with drugs. The police already have a perfectly good law for dealing with proceeds of drug trafficking.

But it does marvels for pushing up our FATF approval rating. FATF likes the way we have penalties that are "appropriately high". Our banks like it too. It makes for trouble-free international fund transfers.

The English poet Alexander Pope said it all long ago:

The hungry judges soon the sentence sign,

And wretches hang that jury-men may dine;

Mr Carson Yeung, will you please appeal against your money laundering conviction right through to the Court of Final Appeal. Justice has a chance there.