43-year-old retail outlet owner apprehended in Yau Ma Tei as credit card fraud syndicate exposed, laundering HK$11.7m through shell company

Yip Yan-wa

2nd December 2023 – (Hong Kong) A criminal syndicate has been discovered to have stolen credit cards used to make transactions at a food retail store in Yau Ma Tei. The store, suspected to be a shell company for money laundering, has seen bank transactions amounting to HK$11.7 million unrelated to actual business activities within a year. A sudden surge in transactions via the store’s Point of Sale (POS) machine took place from September 25th to 30th, involving 17 credit cards and 43 transactions, totalling HK$580,000. Authorities have arrested the 43-year-old female owner of the store.

The Yau Tsim Criminal Investigation Team’s Inspector Yip Yan-wa provided details of the case. She reported that from late September to early October this year, the police received five reports. Four of them were tourists arriving from Turkey, who reported that personal belongings, including credit cards, were stolen onboard. Another individual reported a burglary at their residence, including the theft of their credit card. These stolen cards were used within two to three hours at a food retail store in Yau Ma Tei. All related transactions were conducted via the store’s mobile payment machine (POS machine), with each transaction ranging from HK$20,000 to HK$50,000. It is suspected that the criminals were unable to ascertain the credit limit of the stolen cards, hence the multiple small transactions to avoid triggering the bank’s notification system.

Upon investigation, the police suspected the store’s involvement in the case due to the concentration of all card transactions at this location, irrespective of day or night, and multiple transactions each time. A comprehensive financial investigation into the store revealed that since its incorporation in September last year, between last year-end and November this year, there have been over 700 bank transactions involving more than HK$11.7 million. However, the store had few purchase orders and no business-related transactions with the bank. It is believed that the account’s funds and transactions were unrelated to substantive business activities.

The POS machine involved in the case was applied for earlier this year. From 25th to 30th September, someone attempted to use 41 credit cards to spend over HK$1.8 million. However, due to some cardholders reporting loss or refusing transactions, only 17 cards and 43 transactions were successful, involving HK$580,000.

Inspector Yip Yan-wa revealed that the credit cards involved in the five theft cases totalled HK$328,000. Still, due to the POS machine’s responsible company implementing a “T+7” settlement mechanism, all lost funds were successfully intercepted.

Upon further investigation, the police believe that the criminals obtained the credit cards and used the POS machine applied for by the suspect. Yet, due to the “T+7” settlement mechanism implemented by the responsible company of the POS machine, some transactions were intercepted.

After the investigation, the police suspect that the criminals used the involved company and store as a “smokescreen” for money laundering, leading to the arrest of a local woman involved in the case. She reported being unemployed and is believed to be the holder of the involved store and bank account, the applicant of the POS machine involved, and the tenant of the booth. She had gone to the POS machine company to request the return of the intercepted transaction funds, suggesting her active participation in the crime. She has been released on bail and is required to report to the police in late January next year. The police do not rule out more arrests.