HONG KONG'S AML FRAMEWORK
A strict, multi-tiered legal framework
Hong Kong combats money laundering through a strict, multi-tiered legal framework governed principally by three pieces of legislation and enforced by regulatory and law-enforcement authorities. The system aligns with international standards set by the Financial Action Task Force (FATF) and imposes serious criminal penalties and strict compliance duties on individuals and businesses.
Its AML and counter-financing of terrorism framework is assessed against the FATF Recommendations.
CORE ANTI-MONEY LAUNDERING LEGISLATION
Three Ordinances form the statutory foundation
Hong Kong's anti-money laundering framework combines criminal prohibitions against dealing with proceeds of crime with preventive customer due diligence and record-keeping duties.
Organized and Serious Crimes Ordinance
This is the principal legislation targeting the laundering of proceeds from indictable offences generally. Section 25 makes it a criminal offence to deal with property knowing or having reasonable grounds to believe that the property, in whole or in part, directly or indirectly represents the proceeds of an indictable offence.
Drug Trafficking (Recovery of Proceeds) Ordinance
This Ordinance specifically targets the laundering of proceeds derived from drug trafficking. Its section 25 applies a closely corresponding prohibition to dealing with property known or reasonably believed to represent drug-trafficking proceeds.
Anti-Money Laundering and Counter-Terrorist Financing Ordinance
This Ordinance imposes statutory customer due diligence and record-keeping requirements on financial institutions and designated non-financial businesses and professions, together with the sector-specific supervisory framework.
ENFORCEMENT AGENCIES
- The Hong Kong Police Force, specifically through its specialized Financial Intelligence and Investigation Bureau (FIIB), is the leading enforcement agency handling the vast majority of money laundering cases in Hong Kong.
- Additionally, the Independent Commission Against Corruption (ICAC) has jurisdiction if the offence involves corruption or bribery.
- The Customs and Excise Department (C&ED) leads investigations when the money laundering directly stems from crimes that fall under customs law. For example: trade-based money laundering involving fictitious trading activities, falsified invoices or trade anomalies; and smuggling and excise offence proceeds generated from selling untaxed cigarettes or counterfeit goods.