U.S. and Hong Kong (1985-1997)

US Department of State

International Narcotics Control Strategy Report, April 1993

Bureau of International Narcotics Matters

HONG KONG

I. Summary

Hong Kong is an important center for brokering and transshipping heroin from the Golden Triangle to the U.S. and elsewhere. Drug traffickers also use it to launder narcotics earnings. Hong Kong's counternarcotics effort represents substantial compliance with the goals and objectives of the 1988 UN Convention, although it is not party to the convention in view of its special legal status.

Bilateral cooperation between USG agencies and their HKG counterparts is exemplary. About $25 million in drug-related assets has been confiscated both in Hong Kong and in the U.S. under the U.S.-Hong Kong designation agreement since it came into force in 1991. The Hong Kong courts ruled in January 1992 that U.S. civil court forfeitures will be accepted by local courts under the terms of the bilateral agreement, giving the U.S. the ability to request the freezing of drug assets in Hong Kong by either a civil or criminal forfeiture request. The Hong Kong Government (HKG) is considering sympathetically a USG request for the sharing of seized assets. In one setback, a Hong Kong court ruling voided key sections of the financial disclosure laws; the Hong Kong Government is appealing to the Privy Council.

As of early December 1992, 41 fugitives were extradited from Hong Kong to the U.S. on drug charges. Cooperation between the DEA and U.S. Customs and their HKG counterparts continues to be fruitful. Hong Kong is an active participant in the Financial Action Task Force (FATF).

II. Status of Country

Hong Kong remains an important transit point for drug trafficking and for money laundering of drug proceeds. Most trafficking involves heroin No. 4 brought from the Golden Triangle region by trawlers from Thailand or overland through southern China and other traditional smuggling means.

A key element of the HKG's fight against drugs is the 1989 Drug Trafficking (Recovery of Proceeds) Ordinance, but a court decision in August struck down elements of its money laundering provisions as being in violation of the Bill of Rights. The government has appealed to the UK Privy Council. In the interim, reporting of large financial transactions has dropped greatly, hampering financial investigations.

III. Country Action Against Drugs in 1992

The Narcotics Police and Customs are professional, active enforcement organizations. The authorities reported 6,645 drug- related arrests in the first nine months of 1992. Seizures included 550 kg of heroin and over 2,950 kg of marijuana in the first ten months. The USG is not aware of narcotics-related corruption among senior government or law enforcement officials in 1992; the HKG does not protect or give haven to known traffickers nor, as a matter of policy, does it permit corruption, money laundering or trafficking.

The 1989 Drug Trafficking Ordinance empowered the government to trace, freeze and confiscate proceeds of persons convicted of drug trafficking. About $43 million in drug-related assets have been frozen or confiscated in Hong Kong since its enactment. As noted, bank reports of suspicious transactions dropped sharply since the court ruling on the constitutionality of the law.

The HKG is beginning to set up law enforcement structures to be in place post-1997, including negotiations with the U.S. and several other countries on extradition and mutual legal assistance in criminal matters. There is no evidence that the basic legal system of Hong Kong will not remain in place, according to the terms of Sino-British negotiations on the reversion of Hong Kong.

While Hong Kong is not covered by the legal regime established by the 1988 UN Convention, Hong Kong's active counternarcotics effort represents substantial compliance with its goals and objectives.

Hong Kong is an active participant in the FATF. The HKG has taken a broad range of positive actions on prosecution of traffickers and implementation of financial controls, and has cooperated extensively with the USG.

The number of assumed active drug abusers in Hong Kong was about 35,700 in 1992. Heroin No. 4 remains readily available and is the major drug of abuse. Cough medicine has replaced marijuana as the second most widely-used drug by Hong Kong teenagers, and the government has introduced legislation to place tighter controls on its sale. There is some abuse of cocaine in the entertainment industry and among the younger, affluent population. The HKG maintains three major treatment and rehabilitation programs: mandatory treatment carried out by the Correctional Services Department, outpatient methadone maintenance under the Department of Health, and a voluntary inpatient program conducted by the Society for the Aid and Rehabilitation of Drug Abusers. Other treatment, counselling and public education programs operated by various volunteer agencies complement these major programs. In the first half of 1992, about 6,300 individuals were admitted to various treatment institutions.

IV. U.S. Policy Initiatives and Programs

Cooperation between USG and HKG enforcement agencies is excellent. Asset seizures have risen sharply since 1991. The Hong Kong court ruling accepting U.S. court forfeitures will permit the freezing of drug assets in Hong Kong under U.S. civil or criminal forfeiture requests. The HKG appears sympathetic to a pending USG request for the sharing of seized assets in a particular case.

From January 1 through early December 1992, 41 fugitives were extradited from Hong Kong to the U.S. on drug charges. Cooperation between the DEA and U.S. Customs and the HKG continues to be fruitful. USG counternarcotics goals remain focused on increasing cooperation in drug interdiction, joint prosecution efforts and combatting drug-related money laundering.