Customs officials are partnering with the University of Hong Kong to develop a Hong Kong cryptocurrency tracing tool. This initiative follows the detection of seven suspected money laundering cases involving virtual assets totalling over HK$9 billion (approximately US$1.1 billion) in recent years.

Mario Wong Ho-yin, Assistant Commissioner for Intelligence and Investigation at the Customs and Excise Department, stated on Thursday in a media meet-up that the department would intensify its efforts to combat cross-border money laundering, according to a South China Morning Post report.

This includes closer collaboration with academics, the financial sector, virtual asset industry players, and law enforcement agencies across the region.

He shared that as money laundering threats are transactional and borderless in nature, no single agency would be able to tackle the problem on its own.

Wong emphasised that illegal transactions involving virtual assets, such as cryptocurrency, are on the rise. He noted a growing trend in using these assets for illicit trades and financial crimes.

He revealed that out of the 39 money laundering cases reported to the department from 2021 to May this year, seven involved the use of virtual assets to launder suspected crime proceeds. These seven cases accounted for over HK$9 billion and mostly involved funds being moved under the pretence of legitimate trading activity.

Last April, three individuals were arrested in connection with a money laundering case involving more than 1,000 suspicious transactions totalling HK$1.8 billion. The funds were linked to five companies and 18 local bank accounts. Two of the suspects were accused of handling HK$760 million through a cryptocurrency platform.

Wong said that aside from developing the cryptocurrency tracing tool, the department was already using forensic technology that the university created to monitor illegal streaming of copyrighted content online.

He said the Hong Kong cryptocurrency tracing tool would help meet court evidence requirements when handling these cases. He added that the department relies heavily on support from the University of Hong Kong.

However, he declined to share specific details about how the tool works, citing operational confidentiality.

Professor Yiu Siu-ming from the University of Hong Kong’s School of Computing and Data Science warned that as virtual asset usage and transactions grow, so too will the risk of their exploitation for criminal activities.

Professor Yiu Siu Ming
Professor Yiu Siu Ming

“Different issues will arise when so many products emerge, but current laws and regulations are not necessarily comprehensive. Another factor to note is the safety of these platforms.”

he said.

Wong said the department, in collaboration with the university, is also conducting training programs for both local and international law enforcement officers to strengthen their investigative capabilities.

Customs and the university also hosted a three-day workshop last week, focusing on the latest trends and challenges in combating money laundering. It brought together law enforcement agencies and consulate representatives from eight jurisdictions, including mainland China, India, Iran, New Zealand, Thailand, and Singapore.

Featured image: Edited by Fintech News Hong Kong, based on images by jadethaicatwalk via Freepik, and lifeforstock via Freepik