Freezing Traffickers’ Finances : Hong Kong Wields New Anti-Drug Law

Hong Kong police are being given a powerful new weapon to combat the flow of illegal drugs through the British colony, but it could end up putting the government in the nightclub business.

Supt. Stuart McDouall, head of a new police task force on drug finances, said a law taking effect Sept. 1 is aimed at drying up the finances of the drug trade.

The Drug Trafficking Bill gives the courts the right to confiscate everything a convicted drug trafficker owns. More important, however, it allows for suspected drug traffickers’ assets to be frozen before trial.

“The government could also end up running the business owned by suspects, although it might be through civilian receivers,” McDouall said in an interview.

Keep Businesses Going

“It is in the government’s interest to keep those businesses going, no matter whether they are bars, restaurants or nightclubs,” he said. “Otherwise, the government will be open to being sued for compensation if the suspect is acquitted.”

McDouall’s force will have the power to investigate all assets of traffickers and apply for their sequestration if they are believed to have come from the drug trade.

“Before the law, the traffickers were going to prison but the money kept going around. Now we have the real weapons to hit the drug trade,” he said.

McDouall gave as an example a conviction gained by the Narcotics Bureau last year.

Street-Level Trafficker

“When we started to look at this case in 1984, the man was a street-level trafficker and not very well off.

“But when we caught him four years later, he had built himself up to being a syndicated drug dealer, trading wholesale quantities of drugs.

“The fixed assets he had accumulated were worth a total of $2.56 million U.S., including one factory and its shop outlet, six public transport minibuses, two taxis and three residential flats.”

“Those were just his fixed assets without checking his bank accounts,” he added. “Had we had this law then, we would have been able to freeze his accounts and identify all his assets which would be viable targets for confiscation.”

“In 1988, there were 44 court cases on drug trafficking presented by the Narcotics Bureau alone,” McDouall said.

Local Demand

Local traffickers are not only supplying local demand but also venturing into the international market for quick profits.

According to a U.S. government report, rough estimates indicate that half of the uncut heroin imported into Hong Kong for transshipment is intended for the United States.

“It is quite clear that Hong Kong is a money-laundering center for drug traffickers in Asia, or probably in the world,” said McDouall.

“The Americans guessed Hong Kong is the second biggest money-laundering center in the world behind Panama. But it may or may not be true as it is impossible to tell the size of the operation.”

The British colony is seen as a convenient location for money-laundering because of its status as a major financial center with banking secrecy laws and no foreign exchange controls.

McDouall said drug traffickers were using more sophisticated financial services offered by bankers and accountants to hide their assets from authorities.

“It is going to be an uphill battle all the way,” he said.

Under the new bill, bankers are obliged to report any transaction they suspect is drug-related.