Hong Kong: The Anti Money Laundering Network - Hong Kong Warned of Potential Money Laundering Schemes
Debt Levels Creating Opportunities for Launderers, Says Expert
Last Updated: 13 November 2002

Silkscreen Consulting, the leading counter-money laundering consultancy and part of The Anti Money Laundering Network, today warned of an increased risk of money laundering in Hong Kong.

Nigel Morris-Cotterill, recognised as an expert counter-money laundering strategist, said that the current wave of credit card and mortgage debt is an ideal opportunity for criminals.

"It is a straightforward business proposition for them - and relatively low risk, both financially and in terms of prosecution."

The price of laundering money has risen dramatically over the past five years or so, he said. Whereas the cost used to be, typically, 2 to 5 % it has now risen to between 20 and 30% depending on where the money is and what crime it created it.

"So, offering to pay off a credit card debt and taking an interest rate of only 5% is actually very good business for a money launderer," said Morris-Cotterill who is undertaking research for a book to be published in Hong Kong by Sweet and Maxwell (Asia).

Also, where there are mortgage arrears, the money launderers can find rich pickings: "by agreeing to pick up the arrears and to make all or part of future payments, the money launderer can purchase an interest in the property. When the property is sold, so long as there is equity, he will be repaid. And more, if the documentation is properly done, he will be able to take out his interest with a cheque from a law firm adding credibility to the money he receives. That this may be in several years is an advantage to the money launderer for whom time where the money is "resting" out of sight is an advantage."

And the distressed Hong Kong property market creates yet more chances, says Morris-Cotterill. "Again, the money launderer can see this not just as a laundering scheme but also as a business opportunity. A sale of repossessed property is an ideal hunting ground. The money launderer can build up a portfolio of property which, given the (in historical terms) low property values in Hong Kong, will probably appreciate over the medium term, so providing a return on investment instead of a cost. And the asset will provide an immediate return on investment by renting it out even though yields are currently low, again in historical terms."

The number of incomplete developments, often as a result of cashflow problems with the developer is a further opportunity. "Workers in construction are generally paid in cash," said Morris-Cotterill. This is a perfect opportunity for money launderers to purchase an interest in a construction project with a view to profit and to get rid of cash at the same time."

Morris-Cotterill said that there are a number of indicators that would help credit card companies, banks, law firms, auditors and bookkeepers to identify the schemes he described.

More information on Silkscreen Consulting and all companies within The Anti Money Laundering Network is at www.antimoneylaundering.net

Corporate information for The Anti Money Laundering Network is at www.antimoneylaundering.net and click on "Corporate Brochure" or "Corporate Information."

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Recent Content from this Firm
Tools
Print
Font Size:
Translation
Channels