Tuesday, October 20, 2020

Global money laundering watchdog tones down concern on HK’s lack of extradition deal

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A global money-laundering watchdog has toned down its concern over the lack of rendition arrangement between Hong Kong and mainland China, no longer calling for it to be fixed “as a matter of priority”, the Post has exclusively learned.

In its latest draft report to be endorsed in June, and which was circulated to the Hong Kong government months ago, the Financial Action Task Force (FATF) did not insist that the absence of an extradition deal to send fugitives from the city to some jurisdictions, including Taiwan and Macau, amounted to a “most significant deficit” as described 10 years ago.

The statement then was based on financial concerns over assets recovery between mainland China and Hong Kong in criminal cases.

Instead, the Paris-based body now only calls the status quo a “legal shortcoming”.
The change in stance coincided with an unparalleled political crisis in Hong Kong, sparked by the highly divisive extradition bill proposed by the government, which has since been suspended following massive protests.

But city officials cited the FATF on at least two occasions when justifying the need for the bill, leading lawmakers to question the relevance of the body’s initial concerns and accuse the local government of misleading the public.

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Apart from allowing the cross-border transfer of fugitives, the bill would also facilitate the exchange of evidence with mainland authorities or execute court orders to seize assets – a feature seen by its supporters as a boost for cracking down on money laundering and terrorism funding.

In 2008, the FATF said the city’s lack of such a deal with mainland China, Taiwan and Macau presented “the most significant deficit in Hong Kong’s extradition arrangements”. “It is recommended that these arrangements be concluded as a matter of priority,” the report that year stated.

When the extradition bill was suspended last Saturday, Hong Kong leader Carrie Lam Cheng Yuet-ngor referred to the FATF’s position in 2008, saying that the government was asked by the international community to “rectify the deficiencies in our regime”.

“They said you better do it as a matter of priority,” Lam said. “I will tell the FATF next time they come that I have made an attempt, but somehow we could not deliver, and we will try again if circumstances permit.”

Security minister John Lee Ka-chiu also told a Legislative Council security panel meeting earlier this month that the bill was “to some extent” responding to the FATF’s 2008 recommendation.

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In the latest FATF draft report, which had just been reviewed and endorsed in principle by delegates from 39 jurisdictions at a meeting in Orlando, Florida, the international body no longer described a cross-border extradition arrangement for Hong Kong as “a matter of priority”.

The paper, however, maintained that a remedy should still be “explored”, regarding asset recovery and mutual legal assistance across the border. The latter typically refers to the handling of evidence and witnesses in law enforcement and legal proceedings.

Informal law enforcement cooperation also helped alleviate part of the concern, the FATF noted, while it pointed to “the differences between the legal systems” of the mainland and Hong Kong.

In a statement published on Saturday, the FATF said it concluded that Hong Kong had a “strong legal foundation” and effective measures to combat money laundering and terrorism financing. The final evaluation report would be published by September.

A Hong Kong government spokesman only cited the 2008 FATF report as the latest available document on the matter but refused to confirm the content of the latest draft assessment.

“Hong Kong is now undergoing another mutual evaluation by the FATF,” the spokesman said. “The mutual evaluation report will be published in due course upon adoption.”

The spokesman also did not comment on whether Lee was aware of the latest change in position by the FATF, or if Lam was being misled by citing the body’s earlier report.




Financial sector lawmaker Ronick Chan Chun-ying said the FATF might have revised its approach in assessing the effectiveness of combating money laundering and terrorism financing, by focusing less on the transfer of fugitives.

“It is essentially going back to the objective of the FATF,” Chan said. “It’s the ‘Financial Action’ Task Force, not a criminal action task force.”

It’s the ‘Financial Action’ Task Force, not a criminal action task forceRonick Chan, lawmaker

He added that Hong Kong was a signatory to multinational agreements, making it possible to extradite suspects involved in money laundering and terrorism financing to other jurisdictions, without a formal treaty.

Accountancy lawmaker Kenneth Leung Kai-cheong said the government had been “misleading” by using outdated information to justify its bill.

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“The government previously briefed us about the FATF review, and the point about the extradition bill was never key,” Leung recalled.

He said that, with the latest stance from the FATF, a mutual legal arrangement between Hong Kong and the mainland would not be a priority, noting concerns over the legal system across the border.

Critics of the extradition bill fear Beijing would use the new legislation to prosecute political opponents, and those sent to the mainland would not receive a fair trial.

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