Hong Kong’s government is in the process of improving its anti-money laundering and corporate disclosure laws, in a move that some financial crime experts claim could lead to billions of dollars leaving the island as private companies and boards seek to protect their privacy.

The authorities in Hong Kong have been shaken to the core by last year’s Panama Papers scandal, which showed that Hong Kong was the most active centre in the world for the development of shell companies. Although shell companies have many legitimate purposes, they can also be utilised to conceal assets and avoid taxes.

Although legislative proposals published without any fanfare in January, Hong Kong’s Financial Services and Treasury Bureau (FSTB) plans to impose anti-money laundering laws on non-financial businesses and to require private companies to disclose their true owners.

Hong Kong financial firms have been subject to strict anti-money laundering laws introduced in 2012, but the service sector has until now been operating under self-regulatory regimes without the force of law.