Hong Kong police have recently made significant strides in their battle against financial crime with the arrest of eight individuals allegedly involved in a sophisticated money-laundering operation. Hong Kong police named this as Operation Justiceword. The syndicate, believed to have laundered over HK$88 million (US$11.3 million), employed a complex web of tactics to conceal the illicit flow of funds, primarily through the purchase of cryptocurrencies.
The Modus Operandi
Operation Justiceword was led by Inspector Chung Cheuk-yin of the commercial crime bureau, the crackdown exposed a highly orchestrated scheme. The syndicate’s core members recruited mainland Chinese individuals to establish bank accounts in Hong Kong. These accounts, serving as stooge accounts, were the linchpin of the operation, facilitating the collection of funds acquired through various fraudulent activities.
Criminals within the syndicate then withdrew cash from these accounts and utilized it to purchase virtual currencies from local over-the-counter outlets. The objective was clear: to obscure the origins and trail of the illicit money. To further complicate the investigation, they employed fictitious identities to establish accounts with overseas virtual currency trading platforms. These platforms were instrumental in converting the illicit cash into digital currencies.
The Scope of the Operation Justiceword
The scale of the operation justiceword was substantial. Investigative efforts revealed that the syndicate utilized 72 stooge accounts to launder more than HK$88 million between September 2023 and March 2024.
Stooge accounts are bank accounts held by individuals who agree to let fraud syndicates use their accounts to collect scammed money and launder the proceeds of crime. These individuals, often referred to as “stooges” or “mules,” are either paid or rewarded in some way by the syndicate in exchange for the use of their accounts.
The syndicates typically transfer illicit funds into these accounts, often obtained through various fraudulent activities such as phone scams, investment fraud, e-commerce scams, and job scams. Once the funds are deposited, the criminals can withdraw the cash or use it for other illegal activities, such as purchasing cryptocurrencies, in an attempt to conceal the origins and trail of the money.
The funds were primarily generated through various forms of deception, including phone scams, investment fraud, e-commerce scams, and job scams.
According to the police, approximately HK$6.4 million of the laundered funds were directly linked to 48 reported deception cases within the city.
The Arrests and Suspects
The operation Justicesword resulted in the arrest of eight suspects in a series of well-coordinated raids across Hong Kong. Among those detained were a lifeguard, a computer programmer, a photographer, and a salesman, underscoring the diverse backgrounds of those allegedly involved in the syndicate.
The suspects, aged between 26 and 51, face charges of conspiracy to launder crime proceeds, an offense that carries a penalty of up to 14 years in jail and a HK$5 million fine.
Despite the significant breakthrough, the operation justiceword is far from over. Authorities are still piecing together the intricate network of the syndicate and tracing the final destination of the illicit funds. The police have not ruled out the possibility of further arrests as the investigation progresses.
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Rising Financial Fraud in Hong Kong
The bust comes amid a concerning surge in financial fraud and money laundering cases in Hong Kong. In 2023, the city witnessed a staggering 42.6% increase in various forms of deception, with reported cases soaring to 39,824, up from 27,923 in 2022. The financial losses associated with these crimes also witnessed a sharp rise, reaching HK$9.1 billion in 2023, an 89% increase from the HK$4.8 billion recorded the previous year.
