Anika Begay
In an operation that once again revealed the dark side of cryptocurrency use, Hong Kong Customs has targeted a sophisticated money laundering operation, seizing assets and making several arrests.
According to a press release from the Hong Kong government, the operation to dismantle this money laundering scheme is called “Fencing” and specifically targeted a syndicate accused of laundering approximately $1.5 billion through shell companies and cryptocurrencies.
Details of the cryptocurrency-based money laundering operation
The effective crackdown on the aforementioned money laundering scheme occurred on August 7, when Hong Kong customs officials carried out a large-scale operation, arresting four individuals linked to cryptocurrency-based money laundering activities.
As revealed in the press release, these suspects, aged between 31 and 66, are believed to be “key players” in the syndicate, which orchestrates complex transactions across the Asia-Pacific region.
The investigation revealed that from August 2020 to August 2022, the group managed suspicious funds amounting to approximately $1.5 billion, channeling them through various trading companies.
According to the press release, Hong Kong’s legal framework under the Organised and Serious Crimes Ordinance (OSCO) played a crucial role in the operation, with suspects facing severe penalties if convicted. This includes a fine of up to $5 million and up to 14 years in prison.
The report reads:
Under the OSCO, a person commits a crime if he or she deals with any property knowingly or having reasonable grounds to believe that such property, in whole or in part, represents directly or indirectly the proceeds of a prosecutable crime. The maximum penalty for conviction is a fine of $5 million and imprisonment for 14 years, while the proceeds of crime are also subject to forfeiture.
Additionally, assets related to the crime, totaling approximately $2.2 million, have been frozen in the legal proceedings. The operation also involved raids at multiple properties, where officials seized evidence, including cell phones, computers and cryptocurrency wallets.
As in any investigation, such elements can prove very useful to the authorities to reconstruct the operations of the organization and trace with precision the wider network potentially involved in these illegal activities.
Continued crackdown in Hong Kong
Notably, this latest arrest is just one of many crackdowns that Hong Kong authorities have launched in recent months. With the global cryptocurrency market rapidly growing in terms of adoption, scammers have continued to prey on this financial sector in every way possible.
Just last month, Hong Kong police arrested four people for their involvement in defrauding unsuspecting victims using counterfeit money.
Before that, the Hong Kong Securities and Futures Commission (SFC) warned investors to stay away from three entities suspected of being involved in fraudulent activities related to virtual assets or operating without a license.
Featured image created with DALL-E, chart from TradingView
