Recent headlines in the local press that convictions for money laundering were on the decrease and this was apparently cause for concern need to be given some context.
First, there is no offence of “money laundering” as such. Rather, the relevant legislations set out a number of offences, the two most well-known of which are “dealing” with the proceeds of serious crime and “failing to report” a knowledge or suspicion. For now, the “dealing” offence has become the prosecution’s main weapon of choice in prosecuting alleged offenders, whereas charges for “failing to report” are rare.
Second, while (at the time of writing) the statistics on the Joint Financial Intelligence Unit (“JFIU”) website do show a downtrend in the number of convictions and assets restrained or recovered since 2015, the figures are generally not dramatic. The downtrend can be explained without any suggestion that more people have been getting away with money laundering type activities in the last two years. For example:
- a heightened awareness of anti-money laundering activities has resulted in far greater compliance and reporting across financial institutions, regulated entities and other business sectors, including the professions. As a profession, solicitors have helped lead the charge to combat money laundering in Hong Kong;
- it would be no surprise if the drop in convictions was explained (in part) by certain high profile and landmark cases that passed through the Court of Final Appeal between 2014–2016. These cases helped clarify (among other things) the requisite alternative mens rea for the dealing offence (namely, “having reasonable grounds to believe”) with respect to conduct in Hong Kong and overseas (“Dealing in Proceeds of Crime and the Alternative State of Mind” and “Dealing Offence: Overseas Conduct”, Industry Insights, March 2015 and November 2016, respectively).
Third, the official statistics take no account of just how active (for example) the Securities and Futures Commission has been in the fight against money laundering, as regards those entities or persons governed by its Code of Conduct. It is not unusual to see regulatory investigations or proceedings against licensed corporations and associated entities and their responsible officers for breaches of the industry’s AML guidance. At the same time the SFC leads among the regulators in Hong Kong (as does the Law Society of Hong Kong among the professions) in promoting standards of good practice (“Some Lessons from SFC’s Further Guidance to the Markets”, Industry Insights, March 2017).
Like most (if not all) official statistics, it is important to know their context. Particularly, in this case, as Hong Kong gears-up for her next Financial Action Task Force (and Asia Pacific Group) mutual evaluation in 2018–2019 and while statutory proposals are being considered with respect to the record-keeping and customer due diligence requirements for solicitors, foreign lawyers and accountants in Hong Kong.
While no excuse for complacency, a downtrend in these recent statistics could be a good sign and an uptrend (in future years) should not necessarily be a cause for alarm. Everything has a context.