Russian hot money flows into Hong Kong after West slaps sanctions on Moscow
Western sanctions against Moscow over conflict in Ukraine sees firms turning to the city for their financing needs, but some banks are wary
Russian money is flowing into Hong Kong as investors look for a safe haven from Western sanctions – but investors are running into obstacles with banks, which are nervous about money laundering, analysts say.
In the first seven months of this year, there has been a net outflow of US$28 billion from Russia, in contrast to net inflows of US$36 billion for the whole of last year, according to CrossBorderCapital, a London firm that monitors global liquidity flows.
"A number of banks in Hong Kong have been unwilling to provide financing to certain Russian individuals and corporate entities over the last six months, who failed to pass the banks' anti-money-laundering procedures," said Hugo Williamson, managing director of IPSA International, a global risk consultancy.
This was because Russian depositors and Russians seeking loans faced significant scrutiny by banks in Hong Kong, as the banks sought to minimise the risk of money laundering, said Williamson.
"With this increased interest in Asian money markets comes the increased risk to Asia of possible money laundering by certain Russian criminal or corrupt interests."
Russians have looked to China, Hong Kong and Singapore for finance
The Hong Kong Monetary Authority said that while it "monitors many aspects of the economic and financial environment", it did not have specific information on the inflows of funds broken down by origin.
