New Measures Unveiled to Tackle Fraud & Money Laundering in Hong Kong

Key Takeaways

• Rising Fraud and Arrests: Fraud cases in Hong Kong rose by 11.7% in 2024, with over 10,000 arrests, underscoring the growing complexity of financial crime.
• New Tools for Detection: Expanded use of Scameter data and network analytics will help banks better identify and disrupt mule account networks.
• Enhanced Information Sharing: Legislative amendments will enable more effective bank-to-bank information sharing, strengthening collaboration to combat money laundering and fraud.
• Public Education Efforts: A stronger focus on educating the public about the risks of lending or selling bank accounts, with increased penalties for those involved in money laundering activities.

Deep Dive

The Hong Kong Monetary Authority (HKMA), Hong Kong Police Force (HKPF), and the Hong Kong Association of Banks (HKAB) have come together to announce a series of new measures to tackle the rising wave of fraud and money laundering in the region. The efforts are designed to stay ahead of increasingly sophisticated criminals exploiting technology to conduct their illicit activities at a scale and speed never seen before.

The statistics tell a troubling story. In 2024, Hong Kong saw a significant uptick in fraud, with 44,480 reported cases, a sharp 11.7% increase from the previous year. On top of that, over 10,000 people were arrested for various forms of fraud and money laundering, including nearly 7,700 individuals who allowed their bank accounts to be used for criminal activities, marking a rise of 13.6% from 2023. These numbers illustrate how quickly fraud is evolving and how hard it is to keep pace with the criminals who exploit digital platforms to conduct scams at an unprecedented scale.

In response, the authorities are unveiling several new initiatives aimed at disrupting these fraudulent networks before they can do significant damage. One of the major new tools being introduced is the expanded use of Scameter data, which helps banks identify suspicious accounts. Now, with the added power of network analytics, banks will be better equipped to spot mule account networks and quickly act to shut them down. This is a step towards not just detecting fraud, but proactively stopping it in its tracks.

Beyond better data tools, the collaboration between financial institutions will be taken to the next level with new legislative changes that allow for more fluid information sharing among banks. This is crucial in spotting and preventing illicit activities like money laundering and terrorism financing. Ten banks already use the Financial Intelligence Evaluation Sharing Tool (FINEST) to exchange key intelligence about suspicious activity. By the end of this year, an upgraded version of the platform will be rolled out to handle an even greater volume of information exchanges, improving the overall effectiveness of the industry’s collective effort to combat fraud.

But the new measures aren’t just about technology and legislation. The HKMA is also making sure that banks have access to the best practices and strategies for fraud prevention. This includes ongoing thematic reviews to assess the effectiveness of anti-fraud systems and ensure that the banking sector is continually improving its ability to spot and stop fraud in its tracks. Regular communication between banks and the HKMA will ensure that the sector remains agile and ready to adapt to new threats as they emerge.

A significant part of this initiative is also a focus on public education. The authorities are stepping up their efforts to raise awareness about the risks of lending or selling one’s bank account to others. This is a serious issue, as individuals who allow their accounts to be used for illicit purposes risk severe legal consequences. In 2024, the number of prosecutions for money laundering more than doubled, and sentences for mule account holders have increased by up to 33%.

These new measures, which combine better detection tools, improved information sharing, and more robust public education, represent Hong Kong’s commitment to staying ahead of fraudsters and financial criminals. It’s a comprehensive approach that reflects the growing need for the financial sector to be more agile and collaborative in the face of increasingly complex threats.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.