HK's dirty money

THE authorities' initiative to encourage banking employees to report suspected money laundering activities is to be welcome. But a lack of objective criteria of reporting may reduce its effectiveness.

The initiative, launched yesterday by the Hong Kong Association of Banks in conjunction with the Monetary Authority and the Narcotics Bureau, should have been introduced earlier. Hong Kong's proximity to the Golden Triangle drug-producing areas and its open trading policy seem to have made it a prime target for money launderers. The delay in introducing these measures is curious.

Bank tellers and managers will be taught - through reading materials and videos - skills in spotting suspicious money laundering activities. The onus, however, will be on them to report suspicious cases. Failure to do so may cost them their jobs and land them in jail for a maximum of 14 years. It seems the draconian punishment is there to ensure banking staff comply with the rules.

The severe penalties may boomerang, nevertheless. For fear of losing their jobs, banking staff will simply report activities which may not be a prima facie case of money laundering. Trivial reporting may produce unnecessary work for the authorities. No doubt cases reported in future will treble or quadruple from the ridiculously small 400 cases a year. But how many of the new cases prove to be pursuable remains in doubt.

Indeed, bank tellers and managers should not be severely punished unless they are found collaborating with drug traffickers in laundering money. To be fair, banking staff must be proved negligent before they are penalised.

In today's hi-tech era, drug traffickers and money launderers are very sophisticated. They probably will not walk into a bank with a suitcase full of cash and deposit it into an account. There is a danger that what banks are prepared to teach their staff probably has become anachronistic. Telling banking staff to be more aware of suspicious activities is helpful. But it seems more logical and effective for the authorities and banks to set some objective guidelines of reporting.