In the context of Hong Kong, under the Drug Trafficking (Recovery of Proceeds) Ordinance (Cap. 405) and Section 25(1) of the Organized and Serious Crimes Ordinance (Cap. 455), money laundering is a criminal offense. If a person knows or has reasonable grounds to believe that any property, in whole or in part, directly or indirectly represents any person's drug trafficking or indictable offense proceeds, and still deals with that property, they are committing a criminal offense.The maximum penalty for money laundering in Hong Kong is a fine of HK$5,000,000and imprisonment for 14years.
The Anti-Money Laundering and Counter-Terrorist Financing Ordinance also came into effect on April 1, 2012, and was further amended in March 2018. The purpose of this Ordinance is to enhance the regulatory regime for financial institutions and designated non-financial businesses and professions in Hong Kong to combat money laundering and terrorist financing, in order to ensure that Hong Kong's regime aligns with international standards.
Money laundering, also known as "cleaning dirty money," refers to the process of concealing the origin of illegally obtained funds (i.e., the proceeds of crime) through various means, making them appear to have been acquired through legitimate sources. The purpose of money laundering for criminals is to hide the illicit source of the funds, making it difficult to detect, and thereby enabling them to use these funds freely.
The sources of criminal proceeds are very broad, including: drug trafficking, smuggling, illegal gambling, extortion, blackmail, usury, tax evasion, pimping, corruption, robbery, theft, fraud, copyright infringement, insider trading and manipulation of financial markets, and other illegal activities.
Money laundering is the criminal act of transforming illegally obtained funds into "clean" money. Generally, money laundering is divided into three stages: placement, layering, and integration.
Placing the illegal funds into the financial system, such as banks. This can be done by breaking down cash into small deposits, investments, or currency exchanges.
Through multiple transfers of funds and using complex transaction methods, the source becomes obscure and difficult to trace. For example, remitting funds to multiple accounts to disperse and confuse the flow of money.
Reinject the laundered funds back into normal economic activities, making them appear to be legitimate earnings. This can be done through investments in real estate, luxury goods, or startup companies.
