Joint Financial Intelligence Unit AMLCFT Seminars for DNFBPs

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit AML/CFT Seminars for DNFBPs Joint Financial Intelligence Unit (JFIU) Bonnie Cheung Senior Inspector Customs and Excise Department 1

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Outline of Presentation 1. Joint Financial Intelligence Unit 2. Legislation 3. Suspicious Transactions Report 4. Case Sharing 2

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit JFIU q Established in 1989 q Jointly operated by Police and Customs q Housed within Police Headquarters q Primary function is to receive, analyze and disseminate STR 3

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit AML Legislation s. 25(1) of OSCO/DTROP*: Dealing with property known or believed to represent proceeds of an indictable offence Penalty: 14 -year Imprisonment & $ 5 Million Fine * Organized and Serious Crimes Ordinance, Cap. 455 (OSCO) * Drug Trafficking (Recovery of Proceeds) Ordinance, Cap. 405 (DTROP) 4

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit CFT Legislation s. 7 of UNATMO* Provides or collects funds, with intention or knowing that funds will be used to commit terrorist act(s) (whether or not the funds are actually so used) Penalty: 14 -year Imprisonment & Fine * United Nations (Anti-Terrorism Measures) Ordinance, Cap. 575 (UNATMO) 5

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Suspicious Transaction Reports s. 25 A of DTROP / OSCO s. 12 of UNATMO Any person who knows or suspects any property represents the proceeds of crime or terrorist property shall make a report to an authorized officer. Penalty: 3 -month Imprisonment & $50, 000 fine 6

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit "authorized officer" s. 2 of DTROP / OSCO (a) (b) (c) HKP officers; C&E officers; or any other person authorized by the S for J s. 2 of UNATMO (a) (b) (c) (d) HKP officers; C&E officers; Imm. D officers; or ICAC officers 7

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Suspicious Transaction Reports q DISCLOSURE is SUSPICION based q NO Threshold Reporting q PROSECUTION is based on REASONABLE KNOWLEDGE 8

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Benefits of Making an STR? Immunity from Prosecution for Dealing in the Property 9

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Benefits of Making an STR? s. 25 A(2) DTROP/OSCO s. 12(2) UNATMO If a person deals with property & STR relates to that act, that person has a defence to ML/TF, provided: (i) STR made before act & act done with the consent of an authorized officer; or 10

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Exemption of Liability s. 25 A(3) of DTROP/OSCO s. 12(3) of UNATMO (a) shall NOT be treated as a breach of any restriction upon the disclosure of information imposed by contract or by any enactment, rule of conduct or other provision; (b) shall NOT render the person who made it liable in damages for any loss arising out of(i) (ii) the disclosure; any act done or omitted to be done in relation to the property concerned in consequence of the disclosure. 11

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Tipping Off s. 25 A(5) of DTROP/OSCO s. 12(5) of UNATMO A person commits an offence if, knowing or suspecting that a disclosure has been made, he discloses to any other person any matter which is likely to prejudice any investigation which might be conducted following that firstmentioned disclosure Penalty: 3 -year Imprisonment & $500, 000 Fine. 12

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Restriction on Revealing STR s. 26(1) of DTROP/OSCO NO witness in any civil or criminal proceedings shall be obliged(a) to reveal that a disclosure was made; (b) to reveal the identity of any person as the person making the disclosure; or (c) to answer any question if the answer would lead, or would tend to lead, to the revealing of any fact or matter referred to in paragraph (a) or (b). 13

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Sharing STR Info. with LEAs s. 25 A(9) of DTROP/OSCO and s. 12(6) of UNATMO STR may be disclosed by any authorized officer to(a) Do. J, HKP, C&ED, Imm. D, and ICAC; and (b) the overseas LEAs or FIUs, for the purpose of combating crime/preventing and suppressing the financing of terrorist acts 14

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit JFIU Operation Financial Institutions LEAs STR Intelligence Feedback JFIU LEAs Comm. Gov’t Bodies Overseas FIUs 15

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Case Example (1) Trust Service Provider operating a Trust Company “L” Mr. A Clients Placed their life savings into PTO “Pure Trust Organizations” (PTO) • Asset Protection aud ors r f e D est v n i 500 illion. r e v o 6 m 5 ~ for Defraud • Funds beyond the reach of US Govt’ and creditors Pure Trust Organizations Wired large sum to 51 different US and offshore banks 16

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Significance • Use of trusts to divert the money flow • Use of trusts and corporations to conceal identity of clients 17

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Case Example (2) Defraud clients ~ USD $8 million Client D Deposited to Bank Y &K A/C in Bank Z erte d to A/C in Bank Y Div TCSP A in Two A/Cs were set up in Liechtenstein California A/C in Liechtenstein Held by A Purch renov ase of boa t, ating Calif hotel in ornia. . D & K gave a Power of Attorney to A Trust A (in USA) Over USD $2 millions were withdrawn and transferred out 18

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Significance • Use of trusts to conceal identity of clients • Use of trusts to divert the money flow • Use of offshore bank account 19

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Thank you! 20