N Koreans have cut counterfeit deals in the city, with payments made via Bank of China subsidiary
US authorities are preparing to seize more than US$2.67 million from Hong Kong bank accounts linked to trade in North Korean counterfeit US 'supernotes' and cigarette smuggling.
The money is frozen in three accounts belonging to an unemployed mainland migrant, Kwok Hiu Ha, at the Lai Chi Kok Road branch of Chiyu Banking, a subsidiary of Bank of China Hong Kong, US court documents obtained by the Sunday Morning Post show.
The funds are believed to be the first known link between Hong Kong's open banking system and what US authorities fear is a growing underground trade in the high-quality supernotes, minted on North Korean state-run presses.
US diplomatic pressure is intensifying over the trade - one of the reasons cited for recent sanctions against Pyongyang and US Treasury Department action against Macau's Banco Delta Asia last year.
FBI officials last week met Hong Kong police financial investigators and warned them the existence of the counterfeit notes was now considered a matter of urgent national security. They fear the trade poses a significant economic threat to the United States.
'This case shows that Hong Kong cannot think itself immune from North Korea's criminal activities, despite all the money-laundering protections that it shouts about,' one investigation source said. 'Washington is now sending a clear message - this is getting very hot and it is time to get your heads out of the sand.'