Hong Kong nets only small fry for laundering illegal Chinese money

Sun Apr 7, 2013 5:29pm EDT
 
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By Lawrence White

HONG KONG (Reuters) - Luo Juncheng, a delivery man and school dropout from China's Guangdong province, was 19 years old when he opened an account at Bank of China subsidiary Chiyu Bank in Hong Kong in mid-2009.

Over the next eight months, he moved more than HK$13 billion ($1.7 billion) through the account, making nearly 5,000 deposits and more than 3,500 withdrawals in the largest money laundering case on record in the territory.

Luo is now serving a 10-and-a-half-year jail sentence for illegal money transfers. But his conviction raises wider concerns - how he got away with it for so many months despite the red flags that should have been raised by his transactions, and why no other arrests have been made despite evidence at trial that he did not act alone.

His conviction is one of the few in Hong Kong for money laundering, despite the city's reputation as a hub in money transfers, both legal and illegal, carried out by wealthy Chinese. Experts estimate tens of billions of dollars are laundered in Hong Kong every year, much of it crime or drugs-related money funnelled from China or the gambling haven of Macau.

Another conviction was of Lam Mei-Ling, a 61-year-old illiterate public housing tenant, sentenced to 10 years for her role in a separate money laundering case.

"Lam and Luo were both just cogs in a much bigger money machine," said Steve Vickers, CEO of Steve Vickers and Associates, a specialist risk, risk mitigation and consulting organisation.

"Prosecuting these two for their roles, without any connection to a substantive criminal offence is well wide of the mark from a policy and legal point of view; it's just like killing two chickens in front of the monkey," he said, referring to a Chinese proverb about punishing the weak in order to frighten the powerful.

Hong Kong now has tough new legislation to go after people laundering money and banks that help them do it - the Anti Money Laundering Ordinance (AMLO) that came into effect one year ago. Prior to the AMLO, authorities did not have the power to launch criminal proceedings against banks for ignoring or assisting in money laundering.   Continued...

 
A resident rests as others walk inside footbridges at Choi Wan public housing estate, where a 61-year-old woman Lam Mei-ling who is involving in a money-laundering court case lives, in Hong Kong, March 28, 2013. Hong Kong now has tough new legislation to go after people laundering money and banks that help them do it - the Anti Money Laundering Ordinance (AMLO) that came into effect one year ago. Prior to the AMLO, authorities did not have the power to launch criminal proceedings against banks for ignoring or assisting in money laundering. Picture taken March 28, 2013. REUTERS/Bobby Yip