Joint Financial Intelligence Unit Suspicious Transaction Reporting Case

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Suspicious Transaction Reporting: Case examples Detective Senior Inspector TSANG Chiu-fo Joint Financial Intelligence Unit 1

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit q Established in 1989 q Jointly operated by Police and Customs & Excise Department q Housed in Police Headquarters q Member of FAFT, Egmont Group & Asia/Pacific Group on Money Laundering q JFIU’s functions q Primarily receive, analyze and disseminate STR q Exchange financial intelligence with overseas Financial Intelligence Units q Outreach and training q Maintaining registration of remittance agents and money changers 2

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Role of JFIU Liaison Regulators/ Professional association AML Guideline Financial institutions & DNFBPs Information Financial Services and the Treasury Bureau Liaison Feedbacks JFIU Security Bureau Intelligence Law Enforcement Agencies Intelligence Overseas FIUs 3

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Filing of STRs Suggested format & content detailed in JFIU website (www. jfiu. gov. hk) q STREAMS q Email q Fax q Post q Verbal (only in case of urgency – must be followed-up with a hardcopy) 4

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit “SAFE” Approach w Screen – initially assess if any suspicion arouses; w Ask – put questions to clarify those suspicion aroused from ‘Screen’; w Find – retrieve the customer’s past records, if any, and other available information to see if those suspicion is cleared out; w Evaluate – re-assess if the suspicion is still in existence. If positive, file a STR. 5

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Case Study (1) q q q Mr. X was charged with ML in HK and the proceeds derived was estimated to be around HK$500 M. Accountant’s Expert report showed that Mr. X had benefited about HK$50 M from the offence, and he also made substantial payments to his claimed overseas partner. The report was served to Mr. X and his solicitor. Restraint and Charging Order were obtained in respect of the identified assets of Mr. X & his wife, at just around HK$3 M. Application for variation of the Restraint Order by Mr. X to allow for drawing funds for legal and living expenses from the restrained funds was unsuccessful, as court believed that Mr. X should have hidden asset. 6

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Case Study (1) – Cont’d q Despite being unable to draw on his restrained property to pay his legal expenses, Mr. X was able to fund through his solicitors a 47 -day trial in the Court of Final Instance using two counsels and produced his own expert accountant report to challenge the prosecution expert. q After conviction, Mr. X could still be able to fund different counsels through the same solicitor to appear for him in Appeal Court. q After issue of Confiscation Order, Mr. X was able to settle the order without selling his charged property. Part of this was by using a cashier’s drawn from the client account of his solicitor. q Mr. X was definitely using his hidden assets to fund his costly legal defence and all through the client account of the solicitor. But no STR has been filed. 7

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Case Study (2) q Mr. Y was arrested in a neighbouring country for ‘Bookmaking’ and ML, and was detained in goal. q Mr. Z, a solicitor from HK who had been used by Mr. Y and his family to purchase considerable assets and nominee companies over the past years, visited Mr. Y in custody by instruction of Mr. Y’s wife, and gave a ‘Power of Attorney’ (“Po. A”) for Mr. Y to sign to allow his wife to act on his behalf. q Mrs. Y then subsequently used his Po. A to sell a number of assets to the value of HK$35 M which subsequent investigation found that the assets were directly derived from Mr. Y’s ‘Bookmaking’ activities. q Mrs. Y was subsequently arrested and charged with ML in HK. However, no STR was filed by the solicitor. 8

聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Thanks for attention ! 9