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

US Department of State

Bureau of International Narcotics Matters

International Narcotics Control Strategy Report
April 1994

HONG KONG

I. Summary

Despite laudable enforcement efforts by local authorities, Hong Kong remains a significant center for the transshipment of heroin from Southeast Asia to the US and elsewhere. Traffickers use the territory to arrange deals and launder the proceeds from these and other illicit transactions. Although Hong Kong is not a party to the 1988 UN Convention, the territory's counternarcotics efforts effectively comply with most of the goals and objectives of the agreement. The Hong Kong government is now drafting a revised drug trafficking ordinance to more fully conform with the recommendations of the Financial Action Task Force, in which it is an active participant. Bilateral cooperation between USG law enforcement agencies and their HKG counterparts is excellent. Asset seizures in response to US civil or criminal forfeiture requests continue to increase. The Hong Kong Government is consistently responsive to US extradition applications.

II. Status of Country

Hong Kong brokers and financiers play a prominent role in international heroin trafficking, and the territory remains a significant transit point, although, according to DEA, not to the same extent as in past years. While Thai trawler shipments to Hong Kong continue, there are indications that heroin shipments transported overland through southern China are now either being smuggled to Taiwan or cached at locations on China's eastern coast, rather than being smuggled into Hong Kong as in the past. As East Asia's most important financial center, regional and local drug traffickers use the territory to launder their proceeds both through the banking system and the largely unregulated non-banking sector (money changers, gold shops, and money lenders). As a free port, Hong Kong is a major regional transit point for a broad spectrum of chemicals, including precursors.

III. Country Action Against Drugs in 1993

Policy Initiatives/Accomplishments. Although Hong Kong is not explicitly covered by the legal regime established by the 1988 UN Convention, the territory's active counternarcotics effort represents substantial compliance with its goals and objectives. The Hong Kong government (HKG) continues to revise its laws and procedures to meet the provisions of the convention. Hong Kong is an active participant in the Financial Action Task Force (FATF), and subscribes to the 1971 Convention on Psychotropic Substances.

The HKG has taken a broad range of positive actions on the prosecution of traffickers and implementation of financial controls, and cooperates extensively with USG enforcement efforts. The illegal supply of dangerous drugs, such as heroin, opium, morphine and cannabis, is an indictable offense in Hong Kong. Under the Dangerous Drugs Ordinance, anyone found guilty of trafficking or manufacturing these drugs faces a maximum penalty of life imprisonment and a fine of about $650,000. The 1989 Drug Trafficking (Recovery of Proceeds) Ordinance empowers the government to trace, freeze and confiscate proceeds of persons convicted of drug trafficking offenses and allows for the prosecution of those that assist in the laundering of drug proceeds. The Pharmacy and Poisons ordinance, the 1975 Acetylating Substances (Control) Ordinance, and various other statutes allow the HKG to monitor and control the trade in a number of the chemicals listed in the 1988 UN convention, including precursor elements.

Law Enforcement Efforts. The narcotics branch of the Royal Hong Kong Police and the Customs and Excise Department are highly professional law enforcement organizations. The authorities reported 9,075 drug-related arrests in the first nine months of 1993, versus 9,613 arrests for all of 1992.

Corruption. The USG is not aware of any narcotics-related corruption among senior government or law enforcement officials in Hong Kong, nor does the HKG as a matter of policy encourage or facilitate the illicit production or distribution of drugs or other controlled substances. Hong Kong has a comprehensive anti-corruption ordinance enforced by the Independent Commission Against Corruption (ICAC) that reports directly to the governor.

Agreements and Treaties. The HKG is beginning to set up law enforcement structures to be in place post-1997. Using a model text approved by the Sino-British Joint Liaison Group (JLG), the HKG has negotiated agreements for return of fugitive offenders with several countries. Two rounds of negotiations regarding an extradition agreement have been held with the USG but no progress was made in 1993; a third round will be held in the spring of 1994. The JLG is considering the text of a model mutual legal assistance agreement that would continue to apply post-1997. The USG looks forward to receiving an invitation to negotiate such an agreement on an expedited basis once JLG approval of a model text is obtained, which we hope is soon. In July 1993, the US and Hong Kong renewed until January 1995 the existing bilateral narcotics agreement. The agreement facilitates mutual assistance with regard to the freezing and forfeiture of the proceeds and instrumentalities of drug trafficking. Although there is no evidence that the basic legal system of Hong Kong will not remain in place, each of the territory's statutes must be reviewed and approved by the Sino-British Joint Liaison Group.

Drug Flow/Transit. In addition to heroin transit noted above, cannabis is smuggled into Hong Kong mainly from Thailand, Vietnam, and the Philippines; cannabis resin enters from Nepal, India, and Pakistan; and methylamphetamine moves through Hong Kong from China to Japan and the Philippines. Nearby cities in southern China have been used by trafficking syndicates for temporary storage of heroin and other drugs, and traffickers frequently recruit and train couriers and smugglers to bring these drugs into Hong Kong.

Domestic Programs. The number of registered drug abusers in Hong Kong was about 14,228 in the first nine months of 1993. Heroin no. 4 remains readily available in the territory and is the major drug of abuse. Since the introduction of legislation to tighten the retail sale of cough mixtures in January 1993, marijuana has replaced cough medicine to become the second most widely-used drug by Hong Kong teenagers. There is some abuse of cocaine in the entertainment industry and among the younger affluent population. There are reports that drug abuse by addicts under 21 years of age has shown the greatest increase in the last 12 years.

The HKG runs an extensive preventive education and publicity program to reduce drug abuse in the territory. Under the direction of the governor's Action Committee Against Narcotics and the Narcotics Division of the Security Branch, the Police Department's Narcotics Division organized programs throughout the year to highlight the government's anti-drug message with the help of various local government boards and voluntary groups. The narcotics division also conducted a program of presentations to students in primary six and the territory's secondary schools.

The HKG maintains three major drug 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 nine months of 1993, over 10,000 individuals were admitted to various treatment institutions.

IV. US Policy Initiatives and Programs

US Policy Initiatives. The USG seeks to broaden the already excellent cooperative liaison and operational relationship with HK agencies and lay the groundwork for the transition to Chinese sovereignty in 1997.

Bilateral Cooperation. USG-HKG law enforcement cooperation is excellent, as reflected in the discussion above.

Road Ahead. In the lead-in to 1997, the USG will work closely with the HKG to ensure the continuation of the close relationship, and to revise the legal framework for cooperation. The HKG is expected to propose that we hold talks on a mutual legal assistance agreement which would extend beyond July 1, 1997 once the UK-PRC Joint Liaison Group agrees on a model text, as well as on an extradition agreement.