Speaking at the Bills Committee meeting on the (Amendment) Bill, Mrs Lo said maintaining Hong Kong's status as a major financial centre depends, to a certain extent, on a robust anti-money laundering regime, as an effective regime renders Hong Kong's financial services less accessible to criminal activities.

In respect of dealing with criminal proceeds, a key proposal is to add a new section to the existing Ordinances, i.e. Drug Trafficking (Recovery of Proceeds) Ordinance (DTOC) and Organized and Serious Crime Ordinance (OSCO), to provide that a person commits an offence if, having reasonable grounds to suspect that any property represents any person's proceeds of drug trafficking or indictable offences, he still deals with the property.

"The proposed amendment is targeted at professional money launderers. It also aims to address two deficiencies identified by the international Financial Action Task Force (FATF) on Money Laundering in its comprehensive evaluation reports on Hong Kong's money laundering regime in 1994 and 1998. They are the low prosecution and conviction rates of money laundering offences and the difficulty in proving the mental element of a money laundering offence," Mrs Lo said.

To tie in with the "dealing" provisions under Section 25, the Government also proposes to replace the wordings under the "disclosure" provisions in Section 25A of the two Ordinances from the present "suspect" to "having reasonable grounds to suspect."

"Both proposals to Section 25 and Section 25A will not change the onus of proof, which will still rest totally with the prosecution. Also, they will not alter the existing standard of proof, in that the prosecution will still need to prove beyond reasonable doubt all relevant elements of the crime in relation to the predicate drug trafficking or indictable offences as defined in the two Ordinances," Mrs Lo said.

"Safeguards are available in the existing Ordinances to protect a person from an honest mistake; and we are ready to provide more guidance to the financial sector in updating professional guidelines to protect those who consider themselves inadvertently affected by the proposals," she added.

According to the Police and the Customs, a total of 2,680 money laundering cases have been investigated in-depth since 1996 under Section 25. However, there have only been 61 prosecutions involving 79 persons, resulting in 36 convictions involving 43 offenders. Under 25A, there have been only one prosecution leading to one conviction.

"The current proposals in respect of Section 25 and Section 25A do not pinpoint any particular sector. In fact the banking sector has been cooperating very well with the Government in countering money laundering, as the bulk of reported suspicious transaction cases are from this sector," Mrs Lo said.

"We understand the concerns of some sectors on certain proposals of the (Amendment) Bill. We will continue our dialogues with them with a view to jointly casting the proposals in the Bill to a shape acceptable to all. After all, the success in the fight against money laundering depends on the concerted efforts of the Government, enforcement agencies, professional bodies and every citizen in Hong Kong," she added.

Other proposals in the Bill are largely technical. They include improvements to provisions relating to the application of a restraint order and the confiscation of proceeds derived from drug trafficking, organised crimes or specified offences.