Hong Kong police smash HK$320 million money-laundering operation and arrest 19, but origins of most of cash still mystery
Hong Kong police have arrested 19 suspected members of a money-laundering syndicate that handled more than HK$320 million (US$40.5 million), with the amount uncovered by investigators "far exceeding" expectations and the origins of most of the money still unknown.
The force on Sunday said the syndicate, which began operating around June last year, had also scammed at least 25 victims, with each individual losing tens of thousands of Hong Kong dollars. The biggest single loss was around HK$1 million.
Chief Inspector Lau Ho-tak of the Kowloon East regional crime unit said the amount of money scammed from the known victims amounted to just around HK$4 million, while various bank accounts linked to the syndicate handled about HK$320 million over the past year.
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"This number far exceeds what police knew about. We will continue to trace whether the group and its bank accounts were involved with other scamming or illegal activities, and may arrest more people," he said.
Twelve men and seven women, aged 25 to 42, were arrested in a two-day crackdown on Wednesday and Thursday. Among them were the head of the syndicate and key members, some with triad backgrounds, police said.
Senior Inspector Tuen Yuk-hang said the syndicate leader instructed members to set up bogus investment firms by renting out office space and setting up websites.
They would then cold call potential victims claiming they were investment brokers with "low-risk, high-reward" sales pitches, before persuading people to invest in London gold and cryptocurrencies.
Victims would then be told to transfer money into the syndicate's bank accounts. Some were also asked to open investment accounts on trading platforms and persuaded into relinquishing control over them to their "brokers".
A number of people were charged exorbitant fees, or lured into investing more due to fabricated "wins and losses" in the market.
"In reality, none of these trading platforms were related to London gold and cryptocurrencies. In other words, the scammers never used the victims' money for any investment activity," Tuen said.
"The victims always lost money. They never won."
To avoid getting caught, the syndicate would suddenly shut down their firms after some time and then set up new ones.
The force said the syndicate laundered money through 50 accounts at various traditional and virtual banks, set up by shell companies and individuals.
While raiding one of the group's offices in Kowloon, officers found a large number of contracts with victims, scripts for cold call sales pitches, and expensive jewellery and watches.
Inspector Christine Leung of the force's commercial crime bureau urged residents to remain alert to pitches for low-risk, high-reward investments, and to choose reputable financial institutions.
"No matter where you go, do not easily authorise agents to have control over your account and investments," she warned.
Police last month said more than 600 people fell victim to online investment frauds in July, in which swindlers posing as experts tricked some into buying stocks they claimed were selected by artificial intelligence (AI) software.
The force also said in July that investment scams surged during the first four months of the year, with the largest case involving an accountant who reported losing HK$27 million.
From January to April, 1,174 investment scams were reported, rising from 781 cases in the same period last year.
This article originally appeared on the South China Morning Post (SCMP).
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