Hong Kong police have dismantled a cross-border crypto laundering syndicate after arresting 12 suspects. The group allegedly laundered HK$118 million (approximately $15 million USD) through a network of over-the-counter crypto exchange shops and traditional banks. Authorities said the money came from various scams and was converted into cryptocurrency to hide its origins.
Among the suspects are two important local individuals and ten mainland Chinese operatives, who are all between 20 and 42. The police discovered that the syndicate operated with shell accounts and numerous bank cards to hide illegal funds. This situation demonstrates the difficulties that authorities in the region have with stopping crypto laundering.
Crypto Laundering Ring Busted in Hong Kong
On Thursday, the Commercial Crime Bureau executed a raid on multiple places in Hong Kong. The police found over HK$1.05 million in cash, over 560 ATM cards, various electronic devices, and financial documents. Shirley Kwok Ching-yee, the city’s superintendent of banks, as a result, noted that individuals from the mainland were engaged in a scheme to establish accounts in Hong Kong banks.
“These accounts were allegedly used to receive illicit proceeds from various fraud schemes,” Superintendent Kwok said. The suspects withdrew cash using different bank cards and transported the money to virtual asset exchange stores. There, the funds were converted into cryptocurrency, and as a result facilitating crypto laundering.
Chief Inspector Lo Yuen-shan in addition said that the syndicate operated an office in Mong Kok since mid-2024. Mainland recruits subsequently stayed at the location and awaited instructions to process the illegal money.
Scope of the Crypto Laundering Activities
After an investigation, police found the group laundered over HK$118 million using 550 bank accounts and transactions involving virtual assets. In addition, following surveillance, police arrested the two key local members after they withdrew cash from ATMs and went to exchange shops.
Consequently, among these crypto fraud cases, more than HK$10 million was linked to approximately 58 incidents, and victims lost an estimated total of HK$43.2 million.
The syndicate had approximately 500 fake accounts and used them for money laundering. They would first get funds from ATMs by using cards enrolled to someone else, then move the money to crypto exchange platforms.
Regulatory and Law Enforcement Response
Hong Kong police have however increased efforts to combat fraud and money laundering in the digital asset sector. Moreover, since October 2023, sentences for money laundering offenses have increased by 10 to 15 percent, with penalties ranging from three months to 18 months longer imprisonment. Concurrently, new reports have pointed out flaws in the cryptocurrency systems, with one being a delay in the freezing of funds by Tether.
Due to this delay, more than $78 million worth of USDT was reported moved between Ethereum and Tron blockchains since 2017. Therefore, these loopholes make crypto laundering more likely, necessitating stricter supervision.
Amid the crypto laundering increasing occurrences, Senior Inspector Tse Ka-lun has warned that individuals lending their bank accounts for money laundering face up to 14 years in prison and fines of HK$5 million under the Organised and Serious Crimes Ordinance. The authorities emphasized that tougher actions are necessary to curb the use of personal bank accounts in illegal financial activities.
Kelvin Munene Murithi
Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.
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