Hong Kong’s anti-money laundering operation arrests more than 400 crypto users

Virtual currency has increasingly become an important means of money laundering. The Hong Kong police recently announced the anti-money laundering record since August, arresting 458 people, involving more than 470 million Hong Kong dollars in funds. Among them, many cases involved virtual currency.

While Hong Kong is vigorously promoting the ecological development of Web3.0, virtual assets have also become the key focus of anti-money laundering by regulators. On the one hand, Hong Kong has launched a new license system for virtual asset exchanges, and on the other hand, it has formulated a supporting anti-money laundering mechanism, including customer due diligence, record keeping, regular submission of financial information, and user information registration.

In anti-money laundering-related cases, many people have been arrested for assisting criminal money laundering without knowing it. Industry insiders remind you to be careful of getting shot. Please protect your ID card, bank card and other private information, and be careful when exchanging legal currency. and virtual currencies, it is recommended to trade on local compliant virtual asset exchanges.

Hong Kong police crack down on money laundering, involving more than 13 billion yuan

Recently, the Hong Kong police launched an anti-money laundering operation and arrested 458 suspected money launderers and related persons, involving 314 money laundering cases with a total amount of HK$470 million, and successfully intercepted more than HK$16 million in criminal proceeds.

According to the police, a criminal group lured victims into selling their bank accounts for money laundering at prices ranging from HK$300 to HK$1,500. From October last year to June this year, the group laundered up to HK$110 million in criminal proceeds by buying and selling cryptocurrency.

According to Hong Kong Customs, Hong Kong Customs successfully detected a money laundering case on August 8, involving nearly 900 million Hong Kong dollars.

Since the beginning of this year, the Hong Kong police have strengthened anti-money laundering and detected many money laundering cases. According to public reports and statistics, nearly 10 money laundering cases involving more than 100 million Hong Kong dollars have been detected this year, involving more than 13 billion Hong Kong dollars.

In money laundering cases, virtual currencies have been used in many cases, and the methods are endless.

In a case of money laundering exceeding HK$600 million announced by Hong Kong Customs, a criminal group used an overseas virtual currency trading platform to convert virtual currency into legal currency, and then transferred the criminal funds through traditional bank accounts.

In another case, the criminal suspect first collected money with a bank card, then bought goldware and luxury watches in Hong Kong and resold them, and then used the resale cash to buy virtual currency for double laundering. The amount of money laundered exceeded 100 million Hong Kong dollars.

In May of this year, Hong Kong Customs dismantled a money laundering group involving a total of 3.5 billion Hong Kong dollars. The group opened a number of companies in Hong Kong, received funds of unknown origin from foreign virtual currency trading platforms, and then passed bank accounts of different companies. Send money to each other for the purpose of money laundering.

Due to the characteristics of virtual currency such as decentralization and anonymity, virtual currency has increasingly become an important means for criminals.

Guo Zhihao, director of the digital economy legal affairs department of Beijing Yingke (Shenzhen) Law Firm, said that virtual currency has the characteristics of relative anonymity, high liquidity and decentralization, and can easily become a money laundering tool. Criminals will transfer the stolen money to the seller's account through OTC transactions on the platform or private transactions, etc. After receiving it, they will convert it into legal currency through OTC transactions, underground banks, private transactions, etc. Some criminals will also use currency mixing. Using a device to mix coins has greatly increased the difficulty for the police to solve the case.

According to industry analysts, money laundering, fraud, pyramid schemes, and gambling are the four most common forms of virtual currency crimes, and more than half of virtual currency crimes are related to money laundering. According to incomplete statistics, more than 60% of telecom fraud funds are finally laundered through virtual currency.

Transfer of virtual assets exceeding HK$8,000 requires KYC registration

Due to its low tax rate and no foreign exchange control, Hong Kong used to be a paradise for money laundering. Since last year, Hong Kong has stepped up its fight against money laundering, and many criminal gangs of money laundering have been arrested. Businesses that provide convenience are heavily fined.

On August 15 this year, the Hong Kong branch of Swiss Invest Bank was fined 16 million Hong Kong dollars by the Hong Kong Monetary Authority for violating the "Anti-Money Laundering and Terrorist Financing Ordinance" (hereinafter referred to as the "Anti-Money Laundering Ordinance").

The Anti-Money Laundering Ordinance first officially came into effect in 2018. After Hong Kong announced its embrace of Web3.0 in October last year, Hong Kong launched the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance 2022 applicable to the Web3.0 field in December. Draft" (hereinafter referred to as the "Amendment Bill"), the amendment will take effect on June 1, 2023, and the new license system for virtual asset exchanges "Guidelines Applicable to Virtual Asset Trading Platform Operators" will also take effect.

The "Amendment Bill" states that those engaged in the business of virtual asset exchanges must apply for a license from the Securities Regulatory Commission, and relevant persons must meet the criteria for fit and proper persons and comply with the provisions of the "Anti-Money Laundering Ordinance", including conducting customer due diligence, keeping Recording and safekeeping of customer assets, etc. In addition, the exchange is required to submit its accounts and financial information to the SFC on a regular basis.

Before the above-mentioned system is about to take effect, the China Securities Regulatory Commission updated the "Guidelines for Combating Money Laundering and Terrorist Financing" on May 25, requiring remittance institutions to obtain and record the remitter and payee before transferring virtual assets exceeding HK$8,000 Data, including name, birth information, address, customer identification number of sender and recipient, and additional information such as IP address together with associated time stamp, geo-location data, device identification number is also required.

The guidelines also list the possible uses of virtual asset businesses in the money laundering process, including storing criminal proceeds in the form of virtual assets and using layering technologies unique to virtual assets such as chain stripping and chain jumping for money laundering. Non-custodial wallets, decentralized virtual asset exchanges, peer-to-peer platforms, etc. are particularly attractive to criminals or money launderers.

According to reports, the "Guidelines for Combating Money Laundering and Terrorist Financing" applies to licensed institutions and virtual asset service providers licensed by the China Securities Regulatory Commission. It was first formulated in 2012 and has been revised six times. The new revision will be in 2024 Effective January 1st.

In addition, Hong Kong is also increasing investment in cross-border cooperation, cutting-edge technology research, and manpower to combat money laundering more effectively.

When answering a reporter's question, the Secretary for the Treasury Bureau, Hui Ching-yu, said that Hong Kong has a sound system to combat money laundering. Banks will conduct customer due diligence in accordance with relevant laws and regulatory requirements, submit suspicious transaction reports to the Joint Financial Intelligence Unit, and cooperate with law enforcement agencies in investigations. crimes and the recovery of suspicious funds, etc. The Hong Kong Monetary Authority is responsible for supervising and guiding banks to comply with relevant laws and regulatory requirements, and has been working closely with the Hong Kong Police Force and the banking industry.

In 2017, with the support of the Hong Kong Monetary Authority, the Hong Kong Police Force established the "Anti-fraud and Money Laundering Intelligence Working Group" to strengthen information sharing among the Monetary Authority, the police, and the banking industry. Xu Zhengyu revealed that by the end of June this year, 28 banks had joined the working group, and the banks had identified more than 21,000 previously unknown puppet bank accounts and took immediate action.

In May of this year, the Hong Kong Monetary Authority released the "Anti-Money Laundering Compliance Technology: Network Analysis" report to promote the application of network analysis technology and strengthen the bank's anti-money laundering system response capabilities.

On August 1, Hong Kong Customs upgraded the previous Wealth Investigation Section to the Wealth Investigation Section, with a total headcount of 91 people, an increase of 54%.

Ye Dongjing, senior supervisor of the Wealth Investigation Division, said that Hong Kong, as an international financial center and one of the freest economies in the world, needs a sound, transparent and efficient regulatory system, and the anti-money laundering mechanism is an important part of it.

Beware of unknowingly getting involved in money laundering cases

In many money laundering cases, many people are passively involved without even knowing it.

According to reports, the Hong Kong police said a few days ago that some of the more than 400 people arrested in the anti-money laundering operation this month were also victims of online dating or job hunting scams. They even gave out their online banking login passwords and even sent their bank cards to criminal gangs. In some cases, criminals claimed to assist in receiving bank cash rebates, and induced victims to hand over their ID cards and mobile phone selfies to open virtual bank accounts.

According to the Anti-Money Laundering Ordinance, if you know or have reasonable grounds to believe that any property is the proceeds of crime and still deal with the property, you are guilty of an offense and may be sentenced to a maximum fine of HK$5 million and imprisonment for 14 years. Related crimes will also be punished. confiscated.

At present, it has become the norm for Hong Kong and mainland China to cooperate in combating money laundering. On August 2, the China Anti-Money Laundering Monitoring and Analysis Center held talks with the Wealth Intelligence and Investigation Division of the Hong Kong Police Force. The two sides agreed that it is necessary to further increase the frequency of anti-money laundering intelligence exchanges between the two places and strengthen coordination in cross-border money laundering. .

In mainland China, ordinary crypto users often encounter withdrawal cards, and may even be taken away by the police for investigation.

A practitioner in the encryption industry told Techub News that since this year, many OTC merchants have been arrested on suspicion of money laundering. Some time ago, a well-known OTC merchant of a virtual asset exchange was taken away by the police for investigation. Retail investors were frozen and even taken away by the police for investigation.

Guo Zhihao said that people should be cautious when exchanging legal currency and virtual currency, and try to avoid private transactions, especially without knowing the counterparty information. Secondly, preventive measures should be taken to prevent the unfortunate receipt of black money, such as keeping chat records with the other party, call recordings, transfer records and other materials. Finally, if you do receive black money and your bank card is frozen, you must contact the freezing unit in time. If the case is complicated, you must contact a professional lawyer in a timely manner and actively cooperate with the investigation of the public security agency.

Recently, Hong Kong’s legally licensed virtual asset exchanges have opened to retail transactions.

On August 28, Weng Xiaoqi, Chief Operating Officer of Hashkey Group, said at the "Hashkey Exchange Launching Ceremony" that retail transactions were officially opened, and it can support fiat currency deposits and withdrawals, and provide USD and HKD fiat currency deposits and withdrawals services.

Currently, Hashkey Exchange does not support users in mainland China. Mainland users who have obtained a Hong Kong resident ID card and can provide proof of Hong Kong permanent residence and Hong Kong bank account information can open an account, but the account will be changed to a monitored status when they are in mainland China.