Hong Kong Siblings Arrested Over $50 Million Crypto Money Laundering Scheme
A pair of siblings have been arrested by Hong Kong Customs on suspicion of laundering over HK$380 million ($50 million USD) through bank accounts and a cryptocurrency exchange.
According to an announcement by Hong Kong Customs, a 21-year-old man and a 28-year-old woman were arrested on suspicion of money laundering offenses under the Organized and Serious Crimes Ordinance (OSCO), with further investigations revealing that the pair had opened accounts at a number of banks and a “cryptocurrency exchange trading platform.”
The siblings are accused of engaging in suspected money laundering, by “dealing with money from unknown sources through bank transfers, cash deposits and cryptocurrency.”
According to the South China Morning Post, the pair were found to have received more than HK$100 million ($12.8 million USD) from 380 different personal bank accounts in nearly 2,500 transactions.
Yu Yiu-wing, senior investigator at Hong Kong Customs’ syndicate crimes investigation bureau, told SCMP that the brother had handled HK$38 million ($4.8 million USD) in his cryptocurrency exchange account, including some held in.
“One cryptocurrency was pegged to US dollars,” said Yu. “It was converted into US dollars on the platform and transferred to the brother’s bank account. The money was then diverted to different personal and corporate accounts.”
Yu added that the suspects are believed to have used cryptocurrency in an attempt to obfuscate their transactions. “We believe the [suspects] made use of the obscurity of the platform to help others convert the unknown [income] to fiat money through cryptocurrency,” he told SCMP.
The pair have been released on bail pending further investigation; if found guilty, they face a maximum penalty of HK$5 million ($640,000 USD) and up to 14 years in prison.
Crypto money laundering
The use of cryptocurrency for money laundering is of growing concern to lawmakers and regulators around the world. In October 2021, the U.S. Department of Justice announced the creation of a cryptocurrency enforcement team to tackle financial crimes including money laundering, with U.S. Deputy Attorney General Lisa Monaco stating that, “we won’t hesitate to go after those platforms that help criminals launder or hide their criminal proceeds.”
In November 2021, UK regulator the Financial Conduct Authority (FCA) announced a £500,000 ($670,000) contract to tender for external consultants to help train its staff on crypto crime risks including money laundering and terrorist financing.
The rapidly evolving crypto landscape is throwing up new opportunities for money launderers, too; UK think tank the Royal United Services Institute this month highlighted how non-fungible tokens () are becoming a “new frontier” for money laundering. It argued that the same regulatory framework applied to crypto exchanges should also be imposed upon NFT marketplaces, in particular know your customer (KYC) requirements.