Hong Kong and mainland China are vital links in the US$6 billion money laundering network run by global currency exchange Liberty Reserve, which is facing criminal charges in the United States.
A Hong Kong company, Extension Asia, deposited part of Liberty Reserve's "ill-gotten" funds now demanded by the US authorities at the Hong Kong branch of Bank of Communications, one of China's biggest banks, and a bank in Shenzhen, alleges a US court indictment filed by US prosecutors.
On Tuesday, US federal prosecutors charged Liberty Reserve and seven current and former executives of the firm in the largest international money laundering prosecution by the US government.
"We strike a severe blow against a money laundering enterprise charged with laundering over US$6 billion in criminal proceeds. Liberty Reserve was a financial hub for cyber-criminals, Ponzi schemers, child pornographers, identity thieves, and other criminals seeking to hide, launder, and use ill-gotten funds," Mythili Raman, acting US assistant attorney-general, told a press conference in New York on Tuesday, laying the charges.
Liberty Reserve operated a global digital currency system that provided criminals a way to launder their profits, said Raman. It was used by credit card thieves and computer hackers around the world, including Hong Kong, the mainland, Vietnam and the US, according to the court indictment filed by the US prosecutors.
Liberty Reserve and the defendants have been ordered to forfeit to the US government assets including US$6 billion of laundered money, US$36.92 million deposited in Westpac Bank in Australia and funds deposited in 42 bank accounts in Costa Rica, Cyprus, Russia, Morocco, Spain, Latvia, Hong Kong and mainland China.
These 42 bank accounts include one account in Bank of Communications (Hong Kong) and one account in "Shenzhen Bank (China)". There is no bank with the exact name "Shenzhen Bank", but there are two banks with similar names, Shenzhen Development Bank and Shenzhen Commercial Bank. Both have now merged into Shenzhen-listed Ping An Bank, a subsidiary of Ping An Insurance Group.
The money was deposited in these two bank accounts by a Hong Kong company called Extension Asia, whose address is registered in corporate records as Flat A302, Village Court, 19-25 Village Terrace, Happy Valley. Extension Asia is wholly owned by a British Virgin Islands company named China Elite Asia, according to Hong Kong corporate records.
A Ping An Bank spokeswoman said: "So far, our legal department and our anti-money-laundering department have not asked the US and other authorities any questions regarding this matter. We have always strictly adhered to the anti-money-laundering requirements of the People's Bank of China."
A Bank of Communications spokeswoman said: "As judicial proceedings are under way, it is not appropriate for us to comment on the case. Bank of Communications' Hong Kong branch has taken and will continue to take appropriate actions to ensure compliance with relevant laws and regulations."