HONG Kong triads have set themselves up in the foreign exchange industry, using certain companies to launder money, police sources say. The source said yesterday: ''As there are no regulations governing foreign-exchange dealing it is a perfect cover for organised crime syndicates to invest their illicit funds and even make a profit. ''They are not involved in institutional foreign-exchange firms but are active in smaller pseudo-reputable companies which can operate under a simple company registration. ''However, pending legislation to give the Securities and Futures Commission (SFC) more powers to investigate dubious foreign exchange traders will make organised crime syndicates review their activity in the industry, and will probably force them to seek other means to launder their cash.'' The revelation follows a warning by police for the public to be extremely cautious when investing money in the more than 100 foreign exchange firms in Hong Kong. Brenda Ying Hui Sau-fong, acting senior superintendent of the Commercial Crime Bureau's fraud division, said yesterday that investors should be careful and selective when considering foreign exchange investments. ''Often documents signed when handing over funds to a broking firm to invest in foreign exchange protect the company and provide no legal means for clients to get their money back, even if they realise they have been deceived,'' Ms Ying said. Her comments were echoed by Commercial Crime Bureau Chief Inspector Kevin Li Chiu-yin who urged the public to follow a simple rule: '' If you don't know forex, don't touch it.'' Ms Ying confirmed the Commercial Crime Bureau had investigated the practices of 12 foreign exchange companies this year, resulting in two prosecutions. ''The complaints looked up until August this year involve losses of $112 million affecting 342 victims,'' she said. The recent collapse of EGI International contributed more than 250 victims and at least $55 million in losses to the 1993 statistics. Last year there were just six complaints reported to the Commercial Crime Bureau, involving $11.8 million and affecting only 11 victims. ''There has been a large increase in investigations into foreign-exchange companies and the time is right to warn the public to be very careful,'' Ms Ying said. Despite the increased investigations, she said, it remained difficult to prosecute people involved in foreign exchange scams. She said: ''Usually the companies are protected by contracts signed when the client hands over control of funds. These contracts, almost always, remove liability from the broking company in case of losses. ''This is why investors must check contracts very carefully.'' Ms Ying said the Commercial Crime Bureau welcomed legislation now before the Legislative Council Bills Committee that would put foreign exchange dealers under the watch of the SFC.
