A top government finance official has said that Hong Kong is not a money-laundering haven – the first response from the government following the recent Panama Papers leaks that dubbed the city the world’s top centre for secretive offshore financial services.
Documents leaked from Panama-based law firm Mossack Fonseca showed that Hong Kong was home to 2,212 intermediaries — middlemen entities that set up companies, foundations and trusts to help clients hide their wealth — a number which places Hong Kong above every other country.
Accountancy sector lawmaker Kenneth Leung Kai-cheong raised the issue at a Finance Committee meeting at the Legislative Council, asking whether the government would spend more money on promoting Hong Kong’s image as a “regulated international wealth management centre”.
“I know Hong Kong has strict regulations on anti-money laundering,” Leung said. “I have not seen the government making such clips… you should have the budget to make them to promote this positive fact of Hong Kong.”
Secretary for Financial Services and the Treasury Chan Ka-keung agreed with Leung’s comments on Hong Kong’s policies.
“We agree that the international society usually says places with low tax and more liberal policies are money laundering havens, this is very wrong,” Chan said.
“Hong Kong has been maintaining its strict principle of anti-money laundering, we are also a member of FATF… we will consider increasing promotion, we hope to do more promotion to let foreign societies know how strict Hong Kong regulations are,” Chan added.
The FATF, or Financial Action Task Force on Money Laundering, is an inter-governmental body established in 1989 to develop and promote national and international policies to combat money laundering and terrorist financing.
At the same meeting, Labour Party lawmaker Lee Cheuk-yan questioned if the government had ever launched investigations, if it had ever successfully reclaimed the unpaid taxes or prosecuted any of the offshore companies mentioned in the Panamanian leaks.
Inland Revenues Department Commissioner Wong Kuen-fai said that the department will claim tax no matter if it was a Hong Kong or overseas company, as long as the profits were from Hong Kong.
“We have found transactions related to offshore companies in our [past] investigations, and we have reclaimed the taxes,” Wong said.
Wong added there were companies registered in British Virgin Islands or other known tax havens involved in past investigations.
He said that he could not say how the government would deal with the company mentioned in the leaks, but it would investigate companies if it had evidence showing that their actions allowed them pay fewer taxes than required in Hong Kong.