Walk these streets on the northern part of Hong Kong Island by day, however, and you’ll likely see well-dressed professionals out to lunch. At night, it’s twenty-somethings getting drunk in rowdy bars — not drug lords slinging kilos of methamphetamine or gun runners trying to sell crates of AK-47s.
That’s because all five offices appear to be front companies.
Front companies are not inherently illegal. They are legitimate corporations without significant assets or active business operations that can be used to conceal illegal or unsavory transactions, evade taxes and generally avoid scrutiny. Essentially, they are near-empty offices in tall towers seldom, if ever, visited by their owners.
But the five companies all appear to exist for one reason: to evade the watchful eye of American law enforcement.
Four of the five alleged front companies in Wan Chai have, since 2015, been added to the US Treasury Department’s “Specially Designated Nationals And Blocked Persons List” — a massive document that names all entities sanctioned by the US government. People or companies put on the list are generally barred from doing business with Americans, conducting transactions in US dollars and using the US financial system.
Allegations against the fifth company, the one tied to the North Korean bank, were raised in 2017 by a UN panel that monitors the efficacy and enforcement of sanctions on Pyongyang.
They’ve all likely flocked to the city for the same reasons that many legitimate businesses do. Hong Kong is fully integrated into the global financial system. It’s incredibly easy — too easy, some critics argue — to form a company and staff it with well-educated local employees.
And, for decades, Hong Kong has wholeheartedly embraced limited economic regulation and corporate oversight. Free market, non-interventionist policies have helped supercharge the city’s economy. But financial crime experts say they have historically allowed shady businesses to pour money into the city, regardless of how it was obtained.
Hong Kong’s Companies Registry, which is part of the city’s Financial Services and the Treasury Bureau, told CNN that US sanctions are “unilateral” and have no force in local law. The Companies Registry declined to make the head of the agency, Ada Chung, available for an interview.
Hong Kong has passed laws in recent years aimed at curtailing malicious corporate activity, but plugging the systemic gaps that allow illicit front companies to thrive would risk choking Hong Kong’s legitimate economy, angering the…
Go to the news source: Hong Kong front companies: The Washington-accused drug lords, gun runners and di…
