Mar 1, 2021 | Hong Kong : A new direction to penalize China copycats in Hong Kong – criminal offence of money laundering

Hong Kong : A new direction to penalize China copycats in Hong Kong – criminal offence of money laundering

Hong Kong Customs has recently laid criminal charges against China suppliers exporting counterfeits for the generally called “money laundering” offences. It shall involve two important elements to entitle the Hong Kong Customs to prosecute the offenders.

1. A bank account in Hong Kong which received the sale proceeds of the counterfeits from overseas buyers.
2. Conviction of a buyer in overseas country (e.g. the US) for an offence for dealing with the counterfeits.

Once the charge for “money laundering” offence is laid in Hong Kong, the bank account having received the sale proceeds will be immediately frozen and any asset, mainly real property, owned by the offenders in Hong Kong will be forbidden for sale. If the offenders are finally convicted, the assets of the offenders in Hong Kong proved to be relating to the sale proceeds of the counterfeits will be confiscated.

This new approach particularly targets China suppliers who exported counterfeits from China directly to the overseas countries, and all transactions did not involve Hong Kong except for the bank account in Hong Kong used to receive the sale proceeds. Given the proximity between mainland China and Hong Kong plus the relaxed foreign exchange control and low tax rate provided by Hong Kong, it has become common that mainland China suppliers set up a bank account in Hong Kong to receive sale proceeds from overseas buyers, and we foresee more and more of this kind of cases in future.