Hong Kong authorities have dismantled a cross-border money laundering syndicate that funneled HK$118 million ($15 million) through cryptocurrency and fraudulent bank accounts, resulting in 12 arrests across Hong Kong and mainland China.
According to reports by local media on May 17, the criminal ring operated through over 500 so-called stooge accounts—bank accounts opened by third parties to receive proceeds from fraud. The money was then transferred through local crypto exchange shops, masking the true origin of the funds.
Mong Kok Apartment Used as Laundering Base, Police Claim
Police allege that the group managed its operations from a rented apartment in Mong Kok, where they coordinated illegal activities. The authorities linked HK$9.4 million ($1.2 million) of the laundered funds to at least 58 confirmed fraud cases.
The investigation came to a head on May 15, when police tracked two suspected syndicate members attempting to convert cash into cryptocurrency at a shop in Tsim Sha Tsui. Both individuals were arrested on the spot, leading to the seizure of HK$770,000 ($98,540) in cash. Ten additional suspects, aged between 20 and 41, were arrested soon after.
During the raids, police recovered HK$1.05 million ($134,370) in cash, over 560 ATM cards, 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 involved in the scheme were provided by friends and relatives of the suspects, often without understanding the criminal nature of the activities.
Crypto Crime Surge Prompts Hong Kong to Intensify Crackdown
The arrests come as Hong Kong’s financial sector grapples with a rise in fraud-related crimes. According to police data, fraud cases surged by 12% in 2024, resulting in more than 10,000 arrests. About 73% of these cases involved the use of stooge accounts.
In response, the Hong Kong Cyber Security and Technology Crime Bureau (CSTCB) recently launched a virtual asset analysis tool called ‘CryptoTrace,’ developed in collaboration with the University of Hong Kong. The tool aims to strengthen investigations into crypto-related crimes by providing advanced analytical capabilities.
Meanwhile, legal experts from Hong Kong-based law firm Titus reported that the city lost approximately $3.1 billion to crypto-related scams in the first ten months of 2024.
Authorities are also addressing a sophisticated scam involving a fake “National Hong Kong Coin,” which falsely claimed to be an official government-backed digital currency, further illustrating the growing threat posed by crypto-related fraud.
