The US$12 billion fraud perpetrated by Ms. Truong My Lan and her associates in Vietnam is notable not only for the scale of the fraud and corruption but also for the problems that it indicates in the system of combatting financial crime that is not resulting in targeting of the related money laundering by the authorities or banks.
More reports are emerging of the proceeds of the crimes leaving Vietnam and being invested elsewhere, in particular in Hong Kong. Truong My Lan’s husband is Eric Chu Nap Kee, a Cantonese Chinese who originates from Hong Kong. Chu, as well as his daughter, have owned substantial assets in Hong Kong that are highly likely to have been purchased with funds that were the proceeds of the crimes committed by him, his wife Truong, and their associates.
In addition, it was recently reported in news media in Hong Kong that Dr. Lee George Lam, a former member of the Chief Executive’s Policy Unit Expert Group in Hong Kong, is now wanted by the authorities in Vietnam on an arrest warrant in connection with the crimes committed by Truong My Lan and her associates. According to the report, Dr. Lee has denied any involvement in the crimes but he was a former board member of Saigon Commercial Bank which was controlled by Lan.
As Chu and Truong have been convicted of substantial fraud and corruption offences in Vietnam any proceeds of crime that have been laundered through the financial systems in Hong Kong can be subject to enforcement action under anti-money laundering legislation. Assets owned by Chu and his family and sold in Hong Kong in 2023 have been identified to include the following:
· The Nexxus Building in Central District, sold for US$819 million.
· Hotel project in King’s Road, Tin Hau, sold for around US$14.5 million.
· Commercial / residential site on Finney Street, Quarry Bay, sold for around US$55 million.
· A house on the Peak, on Hong Kong Island, sold for US$38 million.
Although the properties have been sold, the funds from the sales may be parked in bank accounts in Hong Kong. These are the proceeds of crime, and despite the predicate offences having taken place in another jurisdiction, Vietnam, they should be subject to the provisions of financial crime laws in Hong Kong and elsewhere.
There are clear precedents for this action in Hong Kong. In 2000, Yeung Chun Pong and his associates were arrested in Macau, China, charged and convicted of illegal bookmaking offences. In 2005, Yeung was charged in Hong Kong and convicted of ‘Conspiracy to deal with property known or believed to represent proceeds of indictable offence’, which was the proceeds of the illegal bookmaking that he and his associates had been operating from Macau. Yeung was convicted of the charges, having admitted laundering hundreds of millions of dollars from Macau bookmaking through Hong Kong, a separate jurisdiction with a different legal system. He was sentenced to 2.5 years imprisonment, which incidentally is somewhat more than the 13 months sentence recently given to the Chinese money launderers in Singapore.
A crime that took place in Macau led to a conviction in Macau. The proceeds of that crime were laundered through Hong Kong. The money laundering offences were charged in Hong Kong, despite the original crime not having taken place there. This case happened because of highly proactive and creative police officers in the financial crime unit, and importantly clearly illustrated that people could be convicted of money laundering even if the crime happened elsewhere.
In addition to assets already sold, Chu reportedly still have investments in Hong Kong such as The Wellington office tower in Sheung Wan, which he purchased in 2017 for US$380 million, as well as multiple luxury residences in the Peak and Mid-Levels areas reported to have a combined value exceeding US$250 million. Some assets are reported to be held in the name of other close family members.
When financial crimes involving US$12 billion take place anywhere in the world it is incumbent on the authorities in other jurisdictions and also banks in any country to establish if any money laundering related offences may have taken place in their jurisdiction and take action. The Truong case in Vietnam is not a minor fraud – The authorities in that country have stated that the criminality may have cost as much as 6% of national GDP in Vietnam. For the credibility and effectiveness of the global anti-financial crime system to work, law enforcement agencies and financial institutions must act and not wait to be asked to do so. Those in authority should understand their responsibilities to proactively combat financial crime, and there are actions that the police and also the financial crime compliance groups need to take.
Firstly, the police in Hong Kong (and indeed in any financial centre) should immediately commence an investigation into Eric Chu Nap Kee to determine if there are funds and assets in his name in Hong Kong. If such funds and assets are found, the police should assess if there is a case relating to dealing with the proceeds of crime under local money laundering laws (which in Hong Kong are the Organised and Serious Crimes Ordinance, the Drug Trafficking Recovery of Proceeds Ordinance). Chu, as well as any of his family members and associates, commit a money laundering offence if any of them deal with property that they know or have reasonable grounds to believe is, in whole or in part, directly or indirectly, ‘proceeds of an indictable offence’. “Dealing” with funds that were the proceeds of the crimes committed in Vietnam would include receiving, acquiring, concealing, disguising, disposing of, converting, bringing to or removing from Hong Kong. In short, Chu’s funds and assets in Hong Kong may well represent the proceeds of crimes committed in Vietnam and hence can be subject to prosecution in Hong Kong for money laundering offences.
Secondly, financial crime compliance groups in banks, other financial institutions, and indeed entities such as property companies, should immediately review if they hold funds or assets owned by Chu, his family members or business associates, and assess if any of these could conceivably be the proceeds of crime from the crimes that were committed in Vietnam. Based on existing evidence of the scale of the fraud and corruption committed by Chu and his wife Truong My Lan, it must be assumed that any funds and assets brought into Hong Kong or purchased in the city by them are at risk of being the proceeds of crime.
The Joint Financial Investigations Unit (JFIU) of the Hong Kong Government notes that “a person commits the offense of money laundering if he deals with any property, including money, which he knows or has reasonable grounds to believe to be proceeds of drug trafficking / indictable offence.” The JFIU further states that the respective laws require that when a person knows or suspects that any property is proceeds of indictable offence, or was used in connection with an indictable offence, he or she should report his or her knowledge or suspicion to an authorized officer (i.e. JFIU officers) as soon as practicable. Failing to make a report is a criminal offence.
This is a ‘Singapore moment’ for the Hong Kong authorities. The Singapore Police, prosecutors of the Attorney General’s Office, and the judiciary, have shown by their pursuit of a major money laundering syndicate that they are prepared to take enforcement action against criminals who misuse the financial system of Singapore (see Asian Crime Century briefing 33). Hong Kong is also a major international financial centre, and should take swift action against anyone shown to have been involved in financial crime and then uses the city to launder the funds and assets to demonstrate the commitment to combatting financial crime.
Banks and financial institutions need to act swiftly to demonstrate that their financial crime compliance policies and programs are not toothless tigers intended only to indicate a commitment to the regulatory system. The global AML system has been shown to be worthless when US2.2 billion can be laundered through banks in Singapore and US12 billion in proceeds of crime in Vietnam can be directed out of the country into the banking system. If financial crime programs in banks and financial institutions mean anything, then those institutions must act now to support the authorities to prosecute those involved in money laundering by making immediate disclosures regarding funds and assets related to Chu, his family and his associates. Financial crime professionals have a chance to demonstrate now if the system works.
The case of Truong My Lan, her family members and her associates in Vietnam and where they have moved their proceeds of fraud and corruption is not of course only a matter for Hong Kong but for all jurisdictions where funds and assets may have been moved. The disposal of US$12 billion is a significant undertaking that requires multiple jurisdictions, many banks, and a diverse range of investments. Singapore and other financial centres also need to look closely at funds and assets involving Truong My Lan and her husband Chu Nap Kee. There is much more investigation still to be done in this case.