As long as Hong Kong remains a financial centre and a free port, it will be an attractive place for money-launderers and tax dodgers. Reputation is everything to a city such as ours, so tight regulation, transparency and diligent policing are important. The record haul of HK$1.5 billion in criminal assets recovered in the first five months of the year shows the effectiveness of what is in place, but more can be done. With so much at stake, we should be putting ever-greater resources into the fight.
A fight is, after all, exactly what is under way. While the amount seized was nine times that taken in all of last year, largely due to a single seizure related to illegal gambling, the global money-laundering trend is on the rise. It would be foolish to think that Hong Kong will not be affected, or that our city is somehow perceived as less attractive as a destination for dirty money. To the contrary, authorities should be boosting defences; the US Central Intelligence Agency, for one, has alerted that our banks are a conduit for laundering, while the international economic crisis shone a light on the flaws in our regulatory system.
The government, with some justification, regards Hong Kong as the region's money-laundering policeman and other law enforcement bodies call on us for help. But our strengths as a financial centre are also a weakness. The ease with which companies can be set up and managed and the low tax rate are a draw for criminals as well as legitimate firms.
Tax authorities collect less information from banks, securities houses and individuals than do their counterparts overseas. Websites that claim to provide insight into the best places to put shady money cite the perceived secrecy of our banks and corporations. Hong Kong has at times been lumped in with countries and territories held in low financial regard.
While considerable strides have been made to close loopholes, the highest standards have still to be attained. Tougher confiscation laws in line with those implemented in Australia, as suggested by a University of Hong Kong legal researcher, make sense. Strengthening a mechanism that centres on the work of the 22-year-old Joint Financial Intelligence Unit, comprising police and customs and excise officers, also has considerable merit.
It is not as if there is a shortage of funding to do this. That is because all that is recovered goes to the government. The funds are not earmarked for a specific purpose, but go into general revenue. Allocating the funds specifically to boost law enforcement in this area would ensure that they are put to the best possible use. With Hong Kong's reputation to uphold, that makes perfect sense.