Hong Kong under the spotlight in Australian money laundering case

Australia’s financial watchdog, Austrac has filed a case against Commonwealth Bank of Australia (CBA) – one of the country’s “big four” banks – alleging some AUS$ 90 million (US$70.9 million) of laundered money was deposited at CBA Intelligent Deposit Machines (IDM) in Australia.

According to the statement of a claim, filed by the regulator, some of that was then transferred immediately to bank accounts in Hong Kong, adding that three arrests had already been made in the city, regarding the case.

The Hong Kong Monetary Authority (HKMA) – Hong Kong’s de facto central bank – has now launched an investigation into CBA’s conduct, according to a report in the Australian Financial Review, which could not be independently verified by the SCMP.

According to the statement of claim filed by Austrac, four different syndicates deposited the cash at CBA’s IDMs. Two then transferred the money to accounts in Hong Kong.

Of the five people arrested in the case of one of these syndicates, three were in Hong Kong, the statement said, without naming individuals.

In addition two members of the other syndicate to transfer money to Hong Kong, Kha Weng Foong and Yuen Hong Fung, were jailed in July for five and six years, respectively, the statement said. According to Australian media reports Yuen also comes from Hong Kong.

“The Hong Kong Monetary Authority cannot comment on specific matters relating to individual banks. We are monitoring the case and will review the information to assess relevant implications for Hong Kong,” an HKMA spokesperson told the Post.

A CBA spokesperson said: “We take our regulatory obligations extremely seriously and we are one of the largest reporters to Austrac.

“On an annual basis we report over four million transactions to Austrac in an effort to identify and combat any suspicious activity as quickly and efficiently as we can.”

This is not the first time Hong Kong has featured in recent anti money-laundering investigations.

At the start of the year, investigative journalism platform the Organized Crime and Corruption Reporting Project (OCCRP) alleged sums linked to Russian criminals passed through some Hong Kong banks.

And in April, the HKMA fined private bank Coutts HK$7 milion for breaching anti-money laundering rules.

“The fact Hong Kong is sometimes cited in money laundering cases is simply a reflection of the fact that it is a very signifiant financial centre with links to other financial centres,” said Paul Dorrans, a consultant, at law firm Simmons & Simmons.

The number of suspicious transactions reported by the banks has increased significantly in recent years.

In 2016 thecity’s Joint Financial Intelligence Unit received 76,590 suspicious transaction reports, almost 90 per cent of which were from banks. In the first half of this year they received 37,726 such reports.

The banks themselves have also invested significant sums in AML technology and staff.

“Like other major international financial centres, Hong Kong is fully committed to meeting international standards and global initiatives on anti-money laundering and counter-terrorist financing,” the HKMA spokesperson added.

“Authorised institutions are required to comply with the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance and relevant Guideline, which is consistent with international standards.”

Source: SCMP