Crypto-Linked Money-Laundering Scheme Worth $230M Uncovered In Hong Kong

Crypto-Linked Money-Laundering Scheme Worth $230M Uncovered In Hong Kong

According to a South China Morning Post report, Hong Kong customs officers have apprehended three individuals in connection with a massive HK$1.8 billion ($228 million) money-laundering operation that exploited a crypto platform and bank accounts associated with shell companies. 

The arrests were made following an investigation into suspicious activities involving “abnormally frequent” and large transactions in bank accounts lacking tax records, import and export declarations, and physical addresses.

Suspects Allegedly Used Tether

During the probe, it was discovered that one of the accounts involved received significant daily deposits of up to HK$39 million ($4.9 million) and facilitated 167 transactions

Further examination revealed that two suspects allegedly handled HK$760 million, equivalent to 40% of the total funds, through a cryptocurrency platform, specifically Tether.

Florence Yeung Yee-tak, commander of the Financial Investigation Division of the Customs Department, cited alleged challenges in investigating money laundering related to cryptocurrencies due to their anonymity and “lack of jurisdictional restrictions.” 

Yee-tak emphasized that the enforcement team relied on intelligence, capital flow analysis, and financial investigations to gather evidence.

In a coordinated operation, customs officers targeted four residences, five companies, and two licensed money service businesses before making the arrests. 

Trio Arrested For Laundering Billions In Crypto

The trio, consisting of a 42-year-old woman and two men aged 48 and 60, allegedly set up five companies and opened 18 local bank accounts between June 2021 and July 2022. 

These companies were reportedly involved in over 1,000 suspicious transactions, receiving funds from undisclosed sources.

Notably, the three arrested suspects did not know each other. The unemployed woman allegedly played a key role in the money laundering, receiving transfers from various companies and crypto exchanges

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The funds were transferred to other companies or to the two male suspects through licensed money changers.

According to the Customs and Excise Department, the woman managed HK$900 million of the illicit funds, while the 60-year-old driver handled HK$300 million, and the self-employed man dealt with HK$600 million. 

Investigations have revealed that the funds originated from a crypto exchange platform and over 200 local and overseas companies. The funds were rapidly transferred to other entities once deposited into the shell companies’ bank accounts.

The shell companies purportedly operated in mobile phone accessories, wholesale machinery, and vehicle parts. However, they engaged in business transactions unrelated to their stated sectors, including agricultural products and food, indicating their role as shell companies. 

The operation, code-named “Racer,” resulted in the seizure of mobile phones, company documents, stamps, and transaction records. Customs confirmed that the source and destination of the funds are still being investigated.

Although the core members of the syndicate are believed to have been apprehended, customs authorities have not ruled out the possibility of further arrests. 

The three suspects were arrested on charges of conspiracy to deal with proceeds of an indictable offense, commonly known as money laundering. They have been released on bail but could face a maximum penalty of 14 years imprisonment and a HK$5 million fine if convicted.

Crypto

Featured image from Shutterstock, chart from TradingView.com 

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