1 聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Suspicious Transaction Reporting: Case examples Detective Senior Inspector TSANG Chiu-fo Joint Financial Intelligence Unit

2 聯 合 財 富 情 報 組 Joint Financial Intelligence Unit   Established in 1989   Jointly operated by Police and Customs & Excise Department   Housed in Police Headquarters   Member of FAFT, Egmont Group & Asia/Pacific Group on Money Laundering   JFIU’s functions   Primarily receive, analyze and disseminate STR   Exchange financial intelligence with overseas Financial Intelligence Units   Outreach and training   Maintaining registration of remittance agents and money changers

3 聯 合 財 富 情 報 組 Joint Financial Intelligence UnitRegulators/ Professional association Financial institutions & DNFBPs DNFBPs JFIU Overseas FIUs Role of JFIU AMLGuideline Liaison Information Feedbacks IntelligenceIntelligence Law Enforcement Agencies Financial Services and the Treasury Bureau Security Bureau Liaison Liaison

4 聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Suggested format & content detailed in JFIU website (   STREAMS     Fax   Post   Verbal (only in case of urgency – must be followed-up with a hardcopy) Filing of STRs

5 聯 合 財 富 情 報 組 Joint Financial Intelligence Unit “SAFE” Approach  Screen – initially assess if any suspicion arouses;  Ask – put questions to clarify those suspicion aroused from ‘Screen’;  Find – retrieve the customer’s past records, if any, and other available information to see if those suspicion is cleared out;  Evaluate – re-assess if the suspicion is still in existence. If positive, file a STR.

6 聯 合 財 富 情 報 組 Joint Financial Intelligence Unit   Mr. X was charged with ML in HK and the proceeds derived was estimated to be around HK$500M.   Accountant’s Expert report showed that Mr. X had benefited about HK$50M from the offence, and he also made substantial payments to his claimed overseas partner.   The report was served to Mr. X and his solicitor.   Restraint and Charging Order were obtained in respect of the identified assets of Mr. X & his wife, at just around HK$3M.   Application for variation of the Restraint Order by Mr. X to allow for drawing funds for legal and living expenses from the restrained funds was unsuccessful, as court believed that Mr. X should have hidden asset. Case Study (1)

7 聯 合 財 富 情 報 組 Joint Financial Intelligence Unit   Despite being unable to draw on his restrained property to pay his legal expenses, Mr. X was able to fund through his solicitors a 47-day trial in the Court of Final Instance using two counsels and produced his own expert accountant report to challenge the prosecution expert.   After conviction, Mr. X could still be able to fund different counsels through the same solicitor to appear for him in Appeal Court.   After issue of Confiscation Order, Mr. X was able to settle the order without selling his charged property. Part of this was by using a cashier’s drawn from the client account of his solicitor.   Mr. X was definitely using his hidden assets to fund his costly legal defence and all through the client account of the solicitor. But no STR has been filed. Case Study (1) – Cont’d

8 聯 合 財 富 情 報 組 Joint Financial Intelligence Unit   Mr. Y was arrested in a neighbouring country for ‘Bookmaking’ and ML, and was detained in goal.   Mr. Z, a solicitor from HK who had been used by Mr. Y and his family to purchase considerable assets and nominee companies over the past years, visited Mr. Y in custody by instruction of Mr. Y’s wife, and gave a ‘Power of Attorney’ (“PoA”) for Mr. Y to sign to allow his wife to act on his behalf.   Mrs. Y then subsequently used his PoA to sell a number of assets to the value of HK$35M which subsequent investigation found that the assets were directly derived from Mr. Y’s ‘Bookmaking’ activities.   Mrs. Y was subsequently arrested and charged with ML in HK. However, no STR was filed by the solicitor. Case Study (2)

9 聯 合 財 富 情 報 組 Joint Financial Intelligence Unit Thanks for attention !