Hong Kong Monetary Authority (HKMA)
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Joint crackdown on money-laundering

Sean Kennedy

THE Hong Kong Association of Banks (HKAB) has teamed up with the Hong Kong Monetary Authority (HKMA) and police to crackdown on money-laundering in the territory.

In a presentation yesterday with HKMA deputy chief executive (banking) David Carse, and Narcotics Commissioner Alasdair Sinclair, HKAB chairman Paul Selway-Swift said bank staff would be trained to be aware of possible money-laundering.

'The sums involved are huge,' said Mr Selway-Swift, who is also a director of the Hongkong and Shanghai Bank. 'It is estimated that US$500 billion (HK$3,860 billion) is made worldwide each year from the drug trade.

'Because of its geographic location [near the Golden Triangle of opium-producing countries], its open trading policy and the size and sophistication of its financial markets, Hong Kong is a prime target for money-laundering activities.' But the reporting level by local banks of suspected money-laundering remains low, so instructional booklets and videos will be issued to staff.

The booklets, in English and Cantonese, and the video offer examples of suspicious circumstances which might involve laundering, and explain staff's legal responsibilities.

The booklet asks staff to be aware of their customers' businesses, to check their background where necessary and to report suspicions to bank officers.

The officers should then report to the Joint Financial Intelligence Unit operated by the police, and the Customs and Excise Department. 'The message to staff is simple: know your customer, know your business, if in doubt, report,' Mr Selway-Swift said.

Failure to abide by the law can result in termination of employment or criminal prosecution under the terms of the Drug Trafficking (Recovery of Proceeds) Ordinance, which carries a fine of up to $5 million and imprisonment for up to 14 years, according to the booklets.

Mr Carse said bank staff were the front line in the fight against laundering money.

Mr Sinclair said there were about 400 suspicious transactions a year reported in Hong Kong and he expected the latest initiative would hit drug-traffickers, he said.

'I think it will have an effect on money-laundering in the region which therefore will have an indirect effect on drugs.

'If we can stop money-laundering, we destroy the motivation for crimes based on greed and deny criminals access to wealth,' Mr Sinclair said.

The HKAB, the Narcotics Commission and the HKMA had rejected the idea of following the example set by the US, where all transactions over US$10,000 require a report to the authorities.

The training package is just one step in the banks' fight against money-laundering, Mr Selway-Swift said.