Hong Kong Customs Arrests Three in Cryptocurrency Money Laundering Scheme

Hong Kong customs authorities have detained three people implicated in a HK$1.8 billion ($228 million) cryptocurrency-based money-laundering operation. Investigations pointed to large-scale transactions conducted through a crypto platform and multiple shell companies' bank accounts. These activities raised suspicions due to the absence of corresponding tax records, physical addresses, and regular business documentation.

During their investigation, customs officers observed daily deposits reaching up to HK$39 million ($4.9 million) in one account, leading to further scrutiny. It emerged that 40% of the laundered funds, amounting to HK$760 million, were managed through Tether, a popular cryptocurrency.

Florence Yeung Yee-tak, who leads the Financial Investigation Division, highlighted the inherent challenges in tracing such operations due to the anonymity of cryptocurrencies. The investigative team employed advanced methods like intelligence gathering, capital flow analysis, and financial probing to unravel the network.

The enforcement operation saw searches at four residential locations, five corporate entities, and two licensed money service businesses, culminating in the arrests. The suspects, a 42-year-old woman, and two men aged 48 and 60, reportedly orchestrated over 1,000 dubious transactions via 18 bank accounts linked to five companies between June 2021 and July 2022.

Interestingly, the suspects operated independently without prior acquaintance. The woman, unemployed, played a pivotal role, channeling funds between companies and crypto exchanges. The male suspects facilitated further transfers through licensed money changers.

These companies, nominally trading in mobile phone accessories, machinery, and vehicle parts, conducted transactions in completely unrelated fields like agriculture and food, suggesting a facade for laundering.

Dubbed "Operation Racer," the crackdown led to the seizure of mobile phones, company records, and other financial documents. While the main figures in the network have been captured, further arrests have not been ruled out.