Saturday, November 28, 2015   

Biggest money laundering case exposes bank loopholes

Winnie Chong and Victor Cheung

Thursday, January 24, 2013

The laundering of HK$13 billion by a young mainland dropout has kicked open the flaws in Hong Kong's much- vaunted banking system.

The 22-year-old delivery man was jailed for 10-1/2 years yesterday after a jury convicted him of laundering the fortune through a Hong Kong bank over an eight-month period ending in 2010.

He pleaded not guilty to one count of dealing with property known or reasonably believed to be the proceeds of an indictable offense but was convicted after a trial in the High Court.

In sentencing Luo Juncheng, Court of First Instance judge Esther Toh Lye- ping said it was the largest money laundering case in Hong Kong's history. She urged the authorities to pay closer attention to the role of remittance agents in money laundering cases.

Toh also urged the government to consider increasing the maximum penalty for the crime, which stands at 14 years' imprisonment.

The court heard that Luo, who dropped out of school in Guangdong and worked as a delivery man, laundered about HK$50 million a day through a corporate account set up with Chiyu Banking Corp.

Luo, who committed the crime when he was 19, told the court he was acting on behalf of a family friend, called Uncle Pang, who asked him to open the bank accounts and set up a company in Hong Kong called Ace Creation Development.

Luo claimed he did not get any benefit from his HK$13 billion bank dealings - rough equal to Hong Kong's total dole budget.

Speaking outside court, Gloria Yu Yin-ching
, superintendent of the Narcotics Bureau's financial investigation, called on the public not to open company bank accounts for others or to allow others to use their accounts.

Leo Sin Yat-ming, professor in the Chinese University's Department of Marketing, said there could be a loophole in the system as it took the authorities eight months to discover Luo's dealings. "As the money flow is free in Hong Kong, the authorities must find a way to reduce money laundering," he said.

A spokesman for the Financial Services and the Treasury Bureau said Hong Kong has the legal system to investigate suspicious transactions and to chase, freeze and withdraw illegal gains from money laundering.

Legal penalties are always under review to provide a proper deterrence.

A spokesperson for Bank of China (Hong Kong), which holds Chiyu Bank, said it could not comment on individual cases.

"The BOCHK Group, including Chiyu Banking Corporation, complies with all the relevant laws and regulations of Hong Kong as well as the jurisdictions where we operate in combating money laundering and terrorist financing (ML/TF) activities," it said.

"We put in place vigorous internal control systems and take all reasonable measures to ensure that proper safeguards exist to control and mitigate the ML/TF risks."

Police prosecuted 136 money laundering cases from January to November 2012 and 147 people were convicted.

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