Hong Kong banks used to launder cash by Mongolian network

Hong Kong's banking system is under the microscope. Mongolian graft investigators have discovered that some of the city's biggest banks have been used to launder cash by a network linked to the country's former president Nambar Enkhbayar and to other unrelated syndicates.

Senior investigators said they had evidence shelf companies and bank accounts in Hong Kong and Singapore are a favourite means by which corrupt Mongolians move funds to the US, Britain and the rest of Europe.

A dossier of the evidence linking the banks to the movement of corrupt funds is being prepared and is expected to be handed to Hong Kong authorities soon.

Accounts in at least four banks were involved, they said, with the transactions involving tens of millions of dollars.

"We believe it is money laundering on a grand scale," said one senior official in Mongolia's six-year-old Independent Authority Against Corruption. "And it is still going on. Once we have complete evidence, we will pass it on to Hong Kong for action, as we know money laundering is a crime there. It does seem Hong Kong and Singapore is the chosen route, with funds sometimes used to buy property in the UK, Europe and the US."

The comments follow the jailing of Enkhbayar and three others last month after a trial in Ulan Bator. One charge involved government funds funnelled to two Hong Kong shelf companies via state steel factory contracts. One of those jailed was an Enkhbayar associate who, Hong Kong company records show, is the sole director of the two companies.