Cryptocurrencies have many theoretical advantages over fiat money. They do have, however, many real and practical benefits for speculators, criminal gangs, ransomware hackers and money launderers.

In the first case of its kind, Hong Kong customs has shut a local money-laundering syndicate that processed more than HK$1.2 billion (US$155 million) in illegal funds using a cryptocurrency.

Given the overseas prevalence of criminals using such methods to launder money and make all sorts of illegal transactions, a global financial hub such as Hong Kong would not have been so lucky as to escape this trend.

In the Hong Kong case, much of the laundered money ended up in Singapore, which is assisting local investigators. The suspected ringleader and members of the syndicate have been arrested.

The technical sophistication and huge amount of money involved means local authorities must treat this case as a wake-up call, especially considering the ease with which currencies can be transferred in and out of the city.

From February 2020 to May this year, the laundering racket managed to sort through HK$880 million (US$113 million) by using shell companies to open e-wallet accounts to trade in the cryptocurrency Tether. Another HK$350 million (US$45 million) was conventionally laundered through bank accounts set up by shell companies.

Hong Kong customs said it must enhance cooperation with other law enforcement agencies and regulatory bodies. Unfortunately, that is easier said than done at this time of rising geopolitical tensions.

Since the 2019 anti-government unrest, Australia, Canada and the United States have suspended extradition arrangements. Some Western law enforcement bodies have reportedly become ever more unaccommodating.

This does not bode well for the fight against cross-border crimes. Not only is money laundering through cryptocurrencies inherently difficult to trace, underground exchanges in the “dark web” can disguise transactions under extra layers of secrecy.

If there is a silver lining, it is that the mainland has cracked down on cryptocurrency mining and restricted most crypto uses except as an investment asset, thus making it increasingly unavailable in the country. In future, Hong Kong authorities need to be especially alert to sophisticated crimes enabled by technology.