Hong Kong Authorities Dismantle HK$118 Million Money Laundering Operation

In a significant crackdown on financial crime, authorities in China Hong Kong have dismantled a sophisticated money laundering operation that moved approximately HK$118 million ($15 million) through cryptocurrency and hundreds of fraudulent bank accounts. The operation, which involved 12 individuals, was uncovered following a series of coordinated raids and arrests.

The criminal syndicate utilized over 500 so-called stooge accounts—bank accounts opened or provided by third parties—to receive proceeds from various fraud cases. These funds were then channeled through local cryptocurrency exchange shops, effectively obscuring their origins. The group is believed to have operated out of a rented apartment in Mong Kok, where they planned and coordinated their laundering activities.

Authorities were able to link more than HK$9.4 million ($1.2 million) of the funds to at least 58 confirmed fraud cases. The operation came to a head on May 15 after police surveillance tracked two suspected syndicate recruits leaving the Mong Kok base—one visiting a bank, the other an ATM. Both individuals later attempted to convert cash into cryptocurrency at a shop in Tsim Sha Tsui. Officers intervened before the funds could be laundered, arresting both on the spot and seizing around HK$770,000 ($98,540) in cash. Ten additional suspects, aged between 20 and 41, were apprehended soon after.

During the raids, authorities recovered approximately HK$1.05 million ($134,370) in cash, over 560 ATM cards, several mobile phones, and documents linked to bank and crypto transactions. Senior Inspector Tse Ka-lun of the Commercial Crime Bureau stated that many of the bank accounts used in the scheme were provided by friends and relatives of those involved, often without understanding the full extent of the criminal activity.

The arrests come amid a surge in fraud-related crimes in the city. Reports of fraud rose by 12% in 2024, with over 10,000 related arrests. The crackdown coincides with broader efforts to tighten oversight of the crypto sector. Last week, the Cyber Security and Technology Crime Bureau announced the launch of a virtual asset analysis tool to aid in crypto crime investigations. Dubbed ‘CryptoTrace’, the tool is developed in collaboration with the University of Hong Kong, offering “advanced intelligence and investigation support to crime investigation units.”

The Bureau conducted virtual asset investigations and CryptoTrace training sessions in March, aimed at strengthening the capabilities of frontline officers in handling virtual asset cases. In addition to fighting crypto-related crimes, the Bureau has been actively engaging with stakeholders across sectors. The city-state lost a staggering $3.1 billion in the first 10 months of 2024 to crypto-related scams. Additionally, the government recently exposed a sophisticated scam related to the fake “National Hong Kong Coin.” The scam misled the public into believing the government would soon launch an official digital currency.