Rise in reports of dirty money causes alarm

Surge in suspected laundering cases after 2009 crash comes amid concerns over 'brain drain' of top police investigators to the private sector

PUBLISHED : Sunday, 17 February, 2013, 12:00am
UPDATED : Sunday, 17 February, 2013, 5:22am

Hong Kong's efforts to tackle money laundering are under increasing strain due to a surge in the number of suspicious transactions being reported and concerns over a brain drain of investigators to the private sector.

The increase was revealed as the new leaders in Beijing try to make good on their anti-corruption pledges and international banks and financial institutions attempt to restore public faith after a string of dirty-money scandals.

Last year, the Joint Financial Intelligence Unit (JFIU) - a specialist police and customs anti-money-laundering group - received 23,282 reports of suspected illicit movements of cash from banks, accountancy firms, real estate companies and others.

The figure is almost double the 11,678 in 2003.

There was a noticeable acceleration after the 2009 global financial meltdown (see accompanying table). The rise looks set to continue after a new law against money laundering and terrorist financing was passed in April last year requiring banks to be even more vigilant.

Several informed sources have told the Sunday Morning Post that the police force is struggling to retain expertise as officers switch to higher-paying jobs in the private sector, where their skills are in growing demand.

A police spokesman insisted the force had "robust human resources and leadership development plans ... to maintain continuity, consistency and operational efficiency".

However, an ex-police officer now working in the private sector said most of the big banks, financial institutions and regulatory bodies like the Hong Kong Monetary Authority were "stuffed full" of ex-law enforcers.

The most popular targets for private sector head hunters are the police commercial crime bureau, narcotics bureau, criminal intelligence unit - and the JFIU itself.

"In the past people [in the police] were tied in with pensions and quarters and the like, but now that simply isn't the case. A lot of people see joining the force and gaining the training and experience they get there as a precursor to a lucrative move into the private sector.

"If you look around fraud and money laundering compliance units at many banks and other financial institutions in Hong Kong you'll find a large number of former police officers."

Jerry Chang, managing director of headhunter Barons & Co, agreed. "Since the financial crisis and collapse of Lehman Brothers in 2008, we have seen an increasing trend that banks and big companies want to recruit from the police," Chang said.

"These firms are willing to provide a HK$1 million to HK$2 million a year salary plus bonus package for an experienced ex-police officer to strengthen their internal control and compliance systems."

Hang Seng Bank is among the local lenders to employ former police officers. A spokesman said: "We have a rigorous anti-money-laundering programme to ensure we follow local legislation and international best practice.

"Our anti-money-laundering team comprises professionals with audit, legal, regulatory and law enforcement backgrounds to help the bank comply with the highest standards."

HSBC, Standard Chartered and Bank of China, as well as gaming companies like Wynn and Las Vegas Sands in Macau, have also hired ex-police officers to boost their compliance credentials.