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AML/CFT Seminars for DNFBPs Joint Financial Intelligence Unit (JFIU) Bonnie Cheung Senior Inspector Customs

AML/CFT Seminars for DNFBPs Joint Financial Intelligence Unit (JFIU) Bonnie Cheung Senior Inspector Customs and Excise Department. Outline of Presentation 1. Joint Financial Intelligence Unit 2. Legislation Suspicious Transactions Report Case Sharing. JFIU.

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AML/CFT Seminars for DNFBPs Joint Financial Intelligence Unit (JFIU) Bonnie Cheung Senior Inspector Customs

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  1. AML/CFT Seminars for DNFBPs Joint Financial Intelligence Unit (JFIU) Bonnie Cheung Senior Inspector Customs and Excise Department

  2. Outline of Presentation 1. Joint Financial Intelligence Unit 2. Legislation Suspicious Transactions Report Case Sharing

  3. JFIU • Established in 1989 • Jointly operated by Police and Customs • Housed within Police Headquarters • Primary function is to receive, analyze and disseminate STR

  4. AML Legislation s.25(1) of OSCO/DTROP*: Dealing with property known or believed to represent proceeds of an indictable offence Penalty: 14-year Imprisonment & $ 5 Million Fine * Organized and Serious Crimes Ordinance, Cap.455 (OSCO) * Drug Trafficking (Recovery of Proceeds) Ordinance, Cap.405 (DTROP)

  5. CFT Legislation s.7 of UNATMO* Provides or collects funds, with intention or knowing that funds will be used to commit terrorist act(s) (whether or not the funds are actually so used) Penalty: 14-year Imprisonment & Fine * United Nations (Anti-Terrorism Measures) Ordinance, Cap.575 (UNATMO)

  6. Suspicious Transaction Reports s.25A of DTROP / OSCO s.12 of UNATMO Any person who knows or suspects any property represents the proceeds of crime or terrorist property shall make a report to an authorized officer. Penalty: 3-month Imprisonment & $50,000 fine

  7. "authorized officer" s.2 of DTROP / OSCO (a) HKP officers; (b) C&E officers; or (c) any other person authorized by the S for J s.2 of UNATMO (a) HKP officers; • C&E officers; • ImmD officers; or • ICAC officers

  8. Suspicious Transaction Reports • DISCLOSURE is SUSPICIONbased • NO Threshold Reporting • PROSECUTION is based on REASONABLE KNOWLEDGE

  9. Benefits of Making an STR? Immunity from Prosecution for Dealing in the Property

  10. Benefits of Making an STR? s.25A(2) DTROP/OSCO s.12(2) UNATMO If a person deals with property & STR relates to that act,that person has a defence to ML/TF, provided:- (i) STR made before act & act done with the consent of an authorized officer; or (ii) STR made- after the act - on his own initiative - as soon as reasonably practicable

  11. Exemption of Liability s.25A(3) of DTROP/OSCO s.12(3) of UNATMO (a) shall NOT be treated as a breach of any restriction upon the disclosure of information imposed by contract or by any enactment, rule of conduct or other provision; (b) shall NOT render the person who made it liable in damages for any loss arising out of- (i) the disclosure; (ii) any act done or omitted to be done in relation to the property concerned in consequence of the disclosure.

  12. Tipping Off s.25A(5) of DTROP/OSCO s.12(5) of UNATMO A person commits an offence if, knowing or suspecting that a disclosure has been made, he discloses to any other person any matter which is likely to prejudice any investigation which might be conducted following that first-mentioned disclosure Penalty: 3-year Imprisonment & $500,000 Fine.

  13. Restriction on Revealing STR s.26(1) of DTROP/OSCO NO witness in any civil or criminal proceedings shall be obliged- (a) to reveal that a disclosure was made; (b) to reveal the identity of any person as the person making the disclosure; or (c) to answer any question if the answer would lead, or would tend to lead, to the revealing of any fact or matter referred to in paragraph (a) or (b).

  14. Sharing STR Info. with LEAs s.25A(9) of DTROP/OSCO and s.12(6) of UNATMO STR may be disclosed by any authorized officer to- (a) DoJ, HKP, C&ED, ImmD, and ICAC; and (b) the overseas LEAs or FIUs, for the purpose of combating crime/preventing and suppressing the financing of terrorist acts

  15. JFIU Operation Financial Institutions LEAs STR Intelligence Feedback Feedback JFIU Overseas FIUs LEAs Comm. Gov’t Bodies

  16. Pure Trust Organizations Case Example (1) Trust Service Provider operating a Trust Company “L” Clients Placed their life savings into PTO “Pure Trust Organizations” (PTO) Mr. A Defraud • Asset Protection • Funds beyond the reach of US Govt’ and creditors Defraud over 500 investors for ~56 million. Wired large sum to 51 different US and offshore banks

  17. Significance • Use of trusts to divert the money flow • Use of trusts and corporations to conceal identity of clients

  18. Diverted to Case Example (2) Purchase of boat, renovating hotel in California.. Defraud clients ~ USD $8 million Client D & K Deposited to Bank Y A/C in Bank Z A/C in Bank Y Trust A (in USA) Two A/Cs were set up in Liechtenstein D & K gave a Power of Attorney to A TCSP A in California A/C in Liechtenstein Held by A Over USD $2 millions were withdrawn and transferred out

  19. Significance • Use of trusts to conceal identity of clients • Use of trusts to divert the money flow • Use of offshore bank account

  20. Thank you!

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