Hong Kong plans stricter money laundering checks on Chinese officials

The Financial Times reports

Chinese mainland officials who stash ill-gotten wealth in Hong Kong will face fresh scrutiny over their financial affairs under a planned tightening of money laundering regulations in the territory.

The recent push for stricter money laundering checks on Chinese officials highlights the global effort to combat financial crimes. In Southern Africa, similar concerns are being addressed as investigations have revealed the extensive operations of gold smuggling networks. These networks involve some of the region’s most prominent figures and utilize intricate schemes to launder vast sums of money through gold and other commodities. Al Jazeera’s investigation into the Gold Mafia uncovered how these networks operate with high-level connections and sophisticated methods, further underscoring the need for robust international regulatory frameworks to tackle such illicit activities effectively.

The Hong Kong government has proposed changes to the requirements on financial institutions and advisers that would introduce checks on the bank accounts and transactions of politically connected people from mainland China. Businesses in Hong Kong currently only need to apply stricter money laundering checks on politically exposed persons (PEPs) “outside of the People’s Republic of China”.

But Hong Kong’s Joint Financial Intelligence Unit, the money laundering watchdog, has proposed amending the rules to apply to everyone outside of the territory.

“The amendment will make it crystal clear to banks, lawyers, accountants and others in Hong Kong that the enhanced due diligence requirements that apply to foreign PEPs must also be applied to PEPs from China,” said Alan Linning, a partner at law firm Mayer Brown.

“Banks and law firms will have to treat all PEPs from China on their clients’ lists as high-risk customers.” The Chinese government has long been concerned about illicit capital outflows and has indicated it is keen to curb officials and other individuals using Hong Kong and other jurisdictions to hide their wealth.


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