Hong Kong's Legal Community Rejects Proposed Anti-Money Laundering Bill

Mary Swire, Tax-news.com, Hong Kong

28 March 2001

Hong Kong's legal community has been almost unanimous in its decision to reject a provision proposed in Hong Kong's Drug Trafficking and Organised Crimes (Amendment) Bill which calls for money laundering to be an offence based on 'reasonable grounds' of suspicion.

Currently anyone wishing to report a suspicious transaction must actually know that it took place or have proper reason to believe that it took place but this has done little in curbing the vast amount of money-laundering activity that takes place in the jurisdiction.

But legislator Eric Li Ka-Cheung told the South China Morning Post that 'there is not a single legislator supporting the bill now ... the administration has been asked to rethink the bill.' This is for the simple reason says Mr Li that people were afraid they could be unaware that they were dealing with 'dirty' money and still be convicted of money laundering and face the maximum HK$1 million fine and five years in jail.

Mr Li explained people could be found guilty of making a bad judgment call or because they were 'not intelligent enough to be able to interpret it'. He said: 'As it stands we have come to a stalemate. I'm very pleased to see it. I was fighting a lonely battle.'

The legal community is standing firm despite warnings from the Commissioner for Narcotics Clarie Lo Ku Ka-Lee who told a Bills Committee meeting last month that 3000 investigations into money-laundering activities over the past four years has resulted in a mere 49 convictions. She claimed that Hong Kong must improve its financial services laws to avoid the threat of sanctions from international anti-money laundering agencies: 'If we do not imporve ourselves, there is a possibility we could be blacklisted some time in the future. Hong Kong is an international financial centre, the reason we can maintain our status must be based on the fact that we can combat money-laundering,' she said.

The Hong Kong Security Bureau says it shares Ms Lo's concerns and claimed that sources of proceeds from laundering-related crimes such as extortion, casino gambling, human smuggling and tax evasion all go towards making the 'magnitude of money laundering ... impossible to quantify ... but it is certain that such [money-laundering] proceeds . . . represent extremely large amounts of money that could penetrate into our existing legitimate financial/economic networks.' Currently Hong Kong's Organised Crime and Triad Bureau says it has 73 money laundering investigations taking place involving HK$4.9 billion but this could only be the tip of the iceberg.

In a statement the Hong Kong Bar Association noted: 'It may well be difficult to prosecute these kind of [money-laundering] cases successfully but that is not necessarily a bad thing. The underlying objective behind the law at present is to ensure that the courts do not send careless or gullible people to prison who do not belong there.'

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