The city's auction houses risk becoming a prime target for money laundering gangs, experts warn, as sales reach record levels.
With the spring auction season well under way in Hong Kong, one academic says the city's security in this regard is still far behind other markets, such as Britain, where auction houses are explicitly obligated to report suspicious transactions.
'[Auction houses are] even better than casinos, where you risk losing money,' said Simon Young Ngai-man, director of the centre for comparative and public law at the University of Hong Kong. 'With auctions, you're getting something of value, then you can sell it and continue the process of laundering.
'Naturally, auction houses are at risk simply because they handle so much money - and any kind of business that involves large sums of money can be vulnerable to money laundering,' Young said.
Julian Russell, director of Pacific Risk, which provides anti-money-laundering training to businesses, said auction houses were an ideal venue to disguise the transfer of funds, especially in large amounts.
Items from fine-art pieces to antiques and wine could be bought with cash intended for laundering and then later sold off, the expert said. Big-ticket sales of these items have made Hong kong the third-biggest auction market in the world, behind New York and London.
'Auction houses could be used by an individual money launderer by converting cash into goods at fair value, then moving the goods to another place, and perhaps then auctioning them back into cash again. In this manner the 'money trail' becomes hard to follow since it is not simply a cash trail,' Russell said.
Young called on police to work with auction houses, just as they did with estate agents a few years ago when expensive properties began being suspiciously bought with cash.
'To what extent are police working with auction houses on their disclosure duties? Do people even know what to look for?' Young said.
The Joint Financial Intelligence Unit, which spearheads the fight against money laundering, said it had not received any reports of suspicious activities from auction houses.
A spokeswoman for Christie's in Hong Kong said she could not comment on how many suspicious deals it had reported, but confirmed that all staff were trained to prevent dubious transactions.
She said the company's anti-money-laundering team involved specialists and senior members of the legal and financial services departments. In 2011, Christie's Hong Kong sales totalled US$836 million, up 16 per cent from 2010.
A spokeswoman for Sotheby's Hong Kong, which opened in 1973, said all buyers must provide a range of identity documents and contact details.
Sotheby's turnover in Asia reached a historic high of US$1 billion last year. Earlier this month, its five-day spring sales took in HK$2.5 billion, including a small, plain Chinese bowl from the 12th century that was sold for HK$208 million - three times its pre-sale estimate.
Bonhams has similar rules on confirming buyers' identity and it also monitors a buyer's other transactions to ensure they are financially secure, says Julian King, its head of Chinese ceramics and art.