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SCMP Reporter

POLICE want new laws to close a serious loophole which is allowing suspected drug money to be secretly laundered in underground banks.

  The Joint Financial Investigation Group believes money is flooding out of the territory through these self-styled financial institutions.

  Because they are unregulated, no client or transaction records or accounts are kept.

  In most cases, funds can be sent almost anywhere in the region, at little charge and more quickly than mainstream institutions.

  Usually, another firm overseas can give the money to the intended recipient; either by reciting a code or password or, in sophisticated practices, directly into bank accounts.

   The group's acting Superintendent Chris Hanselmann said yesterday police wanted to focus attention on what they call unlicensed remittance centres, which have traditionally been used by domestic helpers to get wages repatriated.

  Mr Hanselmann said growing intelligence reports suggested the illicit use by drug traffickers of the centres.

  It was not known, however, if operators were actually involved in laundering operations.

  'We are trying to build up a profile of the places, but because no detailed information is kept, it is a very difficult process,' he said.

  'In our inquiries, we come across quite a number of companies - but how many are operating or how they are operating is unknown.'   Under the Organised and Serious Crimes Ordinance, police can lay charges if they can prove the person had knowledge or 'reasonable grounds' to believe the money came from an unlawful source.

  Police suspect these companies might be responsible for up to 10 per cent of the territory's monetary transactions.

  It is understood that the Legal Department is looking into underground banking with a view to change.

  A spokesman for the Hong Kong Monetary Authority said the remittance centres were not within their scope of control. 'We are always concerned about unauthorised transactions but our responsibility is mainly to deal with authorised institutions,' the spokesman said. 'In this sort of case, it would usually become a police matter.'   Earlier this year, police and customs were given new powers to fight money laundering after international criticism that the territory's laws were antiquated and ineffective.

  They included giving authorities permission to confiscate proceeds from those who were charged but later died and also take proceeds from absconders.

  It created a simplified offence by removing the need to prove the accused had an agreement with a known drug trafficker.

  Officers can now also seize cash in excess of $150,000 at entry and exit points, if there is a suspicion the money is linked to drugs.



Police want new law to seek out underground operations suspected of laundering