Recently, KOTRA Hong Kong has received an increasing number of reports from Korean companies concerning trade fraud involving Hong Kong firms. Many of these enquiries focus on verifying the legitimacy of local companies, where fictitious representatives or shell entities are often uncovered. In some cases, financial losses have already occurred.

Against this backdrop, KOTRA Hong Kong has partnered with Steve Vickers Associates (SVA)* to provide a practical guide designed to help Korean companies prevent trade fraud and to advise them on appropriate steps should they unfortunately fall victim.

* Steve Vickers Associates (“SVA”) (www.stevevickersassociates.com) is a specialist risk mitigation, corporate intelligence and risk consulting company based in Hong Kong.

Steve Vickers Associates (SVA)

CEO Steve Vickers

Q1. How would you describe the current situation of financial crime in Hong Kong, and what key risks factors are companies facing?

Hong Kong is a world-class financial centre, helping businesses realise their growth and expansion plans across Asia and beyond. However, like many other global financial hubs, it has its share of problems.

Financial crime in Hong Kong remains, sadly, a big problem. In the first quarter of 2026, Hong Kong recorded 9,427 fraud cases, with losses of HK$1.85 billion – up 18.6% on 2025. Document fraud rose 233%, and deepfake cases surged 1,900%.

SVA’s experience shows accounting fraud continues to rise. Remote working also means that staff rely on insecure internet connections, and social media has extended the reach of fraudsters. AI tools can also generate fake documents that pass due diligence checks, and cryptocurrency makes moving illicit funds easier.

Q2. What internal protection measures should companies establish to prevent trade fraud and minimize risks before entering into transactions?

The first line of defence is internal. Companies should:

• improve compliance mechanisms;
• train staff to identify fraud, and “refresh” that knowledge;
• establish enhanced audit trails for overseas transactions;
• strengthen IT systems;
• implement controls over staff approvals, ensuring duties are segregated;
• add to ID or other layered checks, such as video call procedures; and
• develop internal AI-fraud detection procedures.

Q3. What key due diligence checks a company should perform before entering into a transaction?

Boards should require investigations before entering transactions, through basic investigative due diligence verification steps such as:

• examine and verify accounts, company documents, and licenses;
• assess “real” corporate structures;
• check addresses on Google Street View or property records;
• visit company operations, if possible;
• verify bank accounts via published hotline;
• send a small test payment;
• check for prior complaints;
• gather details about key principals;
• conduct media searches;
• examine social media; and
• assess litigation history, and sanctions risk.

Q4. What “red flags” should companies watch for when dealing with Hong Kongfirms, and how should they respond if such red flags are identified?

• no physical address;
• lack of website;
• unusual email details;
• refusal to meet in person or by video;
• name mismatches on bank accounts;
• unexplained third-party involvement;
• misleading information online;
• complex ownership or transaction structures;
• unnecessary use of offshore companies, such as in the British Virgin Islands;
• excessive fees; and
• other “stress” indicators (such as debt claims).

Identification of potential problems early can identify “show-stoppers”, or help with pricing – and it is important for staff to share findings with decision makers.

Q5. What immediate actions should companies take when a trade fraud incident occurs?

When a fraud occurs, it is crucial to act immediately:

• Establish a response unit / structure;
• Change passwords;
• Stop payments;
• Undertake a thorough independent and external investigation;
• Identify control / payment weaknesses;
• Inform relevant departments / staff;
• Confirm integrity of IT / communications systems;
• Examine financial transactions in depth;- Save emails / other data;
• Conduct data forensics captures;
• Report findings at senior level;
• Consider reporting matters to police, or other authority;
• Launch asset tracing as a priority;
• Identify means of restitution.

Q6. What are the official channels for Korean companies to report trade fraud cases occurring in Hong Kong?

Korean companies can report trade fraud cases related to Hong Kong directly to the Hong Kong Police via the e-Report Centre. The steps are as follows:

1. Visit the Hong Kong Police website (https://www.police.gov.hk/ppp_...)
2. Select “e Report Centre” → “Report Technology Crime and Deception”
3. Register an account and log in to the e Report Centre system
4. Provide details of the fraud (including bank account information and upload screenshots of transaction records)
5. Once submitted, the case will be assigned to a dedicated investigation team. The team will contact you by email for follow-up actions and may request additional information.

To confirm that the email is genuinely from the Hong Kong Police, call the Anti Deception Coordination Centre (ADCC) hotline at (+852) 18222.

Conclusion

By maintaining strong internal controls, conducting thorough due diligence before transactions, and responding promptly and systematically in the event of suspected fraud, Korean companies can significantly reduce their exposure to trade fraud risks in Hong Kong. Early detection of red flags and swift action remain the most effective defenses in today’s challenging environment.

* The views expressed herein are solely those of the external contributor and do not reflect the official stance of KOTRA.