A major money laundering operation involving HK$118 million ($15 million) funneled through cryptocurrency and fraudulent bank accounts has been dismantled by Hong Kong authorities, leading to 12 arrests across Hong Kong and mainland China.
According to a May 17 report by Hong Kong Commercial Daily, the syndicate utilized over 500 stooge accounts to launder proceeds from fraudulent schemes. The funds were then processed through local crypto exchange shops to obscure their origin, making detection more difficult.
Laundering Operations Run Out of Mong Kok Safehouse, Police Say
The group is believed to have managed its operations from a rented apartment in Mong Kok, coordinating laundering activities across the region. Police allege that at least HK$9.4 million ($1.2 million) of the laundered funds were linked to 58 confirmed fraud cases.
The crackdown intensified on May 15 when officers monitored two suspects leaving the Mong Kok base and attempting to convert cash into cryptocurrency at a Tsim Sha Tsui shop. Police intervened, seizing HK$770,000 ($98,540) in cash and arresting the suspects.
Authorities subsequently arrested ten more suspects, aged 20 to 41, and recovered HK$1.05 million ($134,370) in cash, over 560 ATM cards, mobile phones, and various financial documents. According to Senior Inspector Tse Ka-lun of the Commercial Crime Bureau, many of the bank accounts were provided by the suspects’ friends and relatives, unaware of the criminal activities involved.
Hong Kong Targets Crypto-Related Crimes Amid Rising Fraud Cases
The arrests align with Hong Kong’s ongoing crackdown on crypto-related crimes, as fraud cases surged by 12% in 2024, leading to over 10,000 arrests. Nearly 73% of these cases involved stooge accounts used to launder money through crypto exchanges.
To combat the rise in financial crimes, the Hong Kong Cyber Security and Technology Crime Bureau (CSTCB) recently launched ‘CryptoTrace,’ a virtual asset analysis tool developed with the University of Hong Kong. The tool provides advanced tracking and investigation capabilities for officers handling crypto-related cases.
Legal firm Titus estimates that Hong Kong lost $3.1 billion to crypto-related scams in the first ten months of 2024. The government has since warned residents about sophisticated schemes, such as the fake “National Hong Kong Coin,” which falsely claimed to be a government-backed digital currency.
Hong Kong law enforcement has ramped up efforts to track and dismantle crypto-laundering networks, but authorities warn that criminal organizations continue to evolve their tactics, making detection increasingly challenging.
