Hong Kong hammers money laundering


Tsang declined to comment on the Bank of China fraud investigations, saying they are beyond his authority

By Alex Frew McMillan
CNN

HONG KONG, China -- Hong Kong's top civil servant called on a task force to crack down on illegal money laundering on Wednesday.

"We must tighten the screws on this insidious crime," Chief Secretary Donald Tsang told the Financial Action Task Force on Money Laundering.

Tsang said estimates show hundreds of billions of dollars in illegal funds are used for terrorism, drug trafficking and other crimes around the world each year.

Around 300 delegates from around the world have gathered in Hong Kong to tackle money laundering, particularly the stemming of the flow of funds to terrorists.

It is the second meeting of the task force since the September 11 attacks. Its members drew up an eight-point plan to curb the way terrorism is funded at an emergency meeting on October 30 in Washington, D.C.

The delegates in Hong Kong are discussing those eight points and also hammering out 40 general recommendations on ways to fight money laundering, dealing with drug crimes and the like.

Tsang: No comment on Bank of China

When asked about recent revelations of fraud investigations at the Bank of China, Tsang declined to comment.


This is the second task-force gathering since September 11, and the focus is first and foremost on terrorism

"I am not privy to information," Tsang said. "This is a matter better directed to the right person."

Authorities in China confirmed Tuesday they are investigating at least two major fraud cases at the Bank of China. The investigations include the disappearance of an unspecified amount of money in Guangdong province, which borders Hong Kong.

The revelations threaten to disrupt a billion-dollar stock offering of the bank's Hong Kong branch.

But Tsang, Hong Kong's former finance minister, said he was not the appropriate official since the investigations are going on in mainland China.

Tsang is Hong Kong's Chief Secretary for Administration, second only to the chief executive in this special administrative region of China.

Task force 'galvanized' by September 11

The Financial Action Task Force was set up after a G-7 summit in 1989 to fight money laundering in general, but the attacks in New York and Washington have given it a new focus.


Tsang says billions of dollars are illegally laundered around the world every year

Tsang said the group had been "galvanized" to fight terrorism after the September 11 attacks.

Hong Kong, one of Asia's key banking centers, is hosting the task force this year. Delegates and observers from 55 jurisdictions have gathered in the city.

Tsang was speaking at the start of a closed-door meeting of the group. Discussions on tackling money laundering started Wednesday morning and run through Friday February 1.

Tsang said authorities have restricted or removed as much as HK$3 billion ($385 million) in illegal money in the former British colony "in recent years."

He warned the delegates to make sure civil liberties are not trampled in the process of tackling money laundering.

"I'm sure that many of you here at this session are familiar with what I'm saying," he said. "We are experiencing this dilemma right here in Hong Kong."

Money laundering involves sending money that was raised illegally to banks where it can be "washed," so that it appears to have been raised legitimately.

Terrorism similar to organized crime

The task force says terrorists use many of the same techniques as organized crime to clean their money.

According to the group, terrorists raise funds locally, put them in banks in the country where they operate, then ship the money to offshore tax havens and finally to several European banks.

That money can then be shipped back to the country of origin looking "clean" and legitimate, the task force states.

The task force has 29 member countries and is overseen by the Paris-based Organization for Economic Cooperation and Development.