Hong Kong is battling to “address gaps” in the fight against dirty cash as it struggles to tackle a mountain of money laundering reports that have piled up in recent years, a landmark government report released on Monday night has revealed. Two days after it emerged that the city’s financial system is groaning under a deluge of suspicious transaction reports, mostly from banks, an official risk assessment of the challenges Hong Kong faces has described the rise in money laundering reports as “significant”. The “Hong Kong money laundering and terrorist financing risk assessment report” was released by officials on Monday night, less than two days after the Post revealed the burgeoning problem the city now has with suspicious financial transactions linked to local, national and international criminal enterprises. Produced by the Financial Services and Treasury Bureau, the release of the 132-page report came as local authorities prepared for a major audit of the city’s anti-money-laundering capabilities by a team from the Paris-based international dirty money watchdog, the Financial Action Task Force (FATF). That audit team is expected to arrive in Hong Kong at the end of October to conduct a detailed investigation into how well, or otherwise, the city is faring in its battle against the increasingly sophisticated methods global criminal and terrorist networks use to hide and clean dirty money. The report outlines the “threats and vulnerabilities facing various sectors in Hong Kong and the city as a whole” by money laundering, and identifies areas of improvement and the steps being taken to address what is acknowledged to be an international problem. It also makes a de facto admission that the current, local anti-money-laundering regime is under stress but that solutions are being pursued. Hong Kong banks’ efforts against money laundering to face scrutiny as global regulator’s visit looms “The number of suspicious transaction reports received by the Joint Financial Intelligence Unit has risen significantly over the past five years,” the report said. “The rapid growth in [suspicious transaction reports] reflects a growing awareness of money laundering and terrorist financing but presents challenges to the JFIU in terms of handling capacity.” “Certain gaps in anti-money-laundering and counter terrorist financing legislation vis-à-vis the Financial Action Task Force recommendations were identified in the process of conducting the risk assessment, following which legislative exercises have been pursued to address the gaps,” it added. Hong Kong is a member of the FATF. Detailing its fight against dirty money and pointing out that as “an international finance, trade and transport hub with strong links to mainland China”, Hong Kong is exposed to an array of money laundering threats. The report also pinpointed four areas to shore up. Hong Kong slow to act on suspected money-laundering scheme that duped Filipino maids, legal experts say It said the government would work on “updating the legal and regulatory framework, reinforcing the adoption of a risk-based approach in preventive and supervisory measures, stepping up efforts to restrain and confiscate crime proceeds, and strengthening international cooperation”. At the weekend, the Post reported that in 2017 the Joint Financial Intelligence Unit – effectively a clearing house for reports of suspicious activity filed by banks and other financial institutions – received 92,115 reports of transactions with suspected links to money laundering or terrorist financing. In 2011, the figure was just 20,287.