Cyber fraud continues to pose a significant threat to businesses and individuals in Hong Kong and elsewhere around the world. According to the official statistics for Hong Kong, 2022 saw a significant increase of deception cases of over 8,000 cases, over 70% of which were Internet-related. The Hong Kong Police has developed a ‘No Consent Regime’, which encompassed a practice of issuing so-called ‘Letters of No Consent’ to banks for accounts which contain suspected proceeds of crime, thereby triggering informal bank freezes on these accounts.

Since finding that the Police’s use of a “No Consent Regime” (“Regime”) in freezing accounts that contain suspected proceeds of crime was unlawful and unconstitutional, the Hong Kong Court of First Instance has now handed down its decision on relief and costs in Tam Sze Leung & Ors v. Commissioner of Police [2022] HKCFI 772.
The Court declared that the Letters of No Consent (LNCs) in issue and the Regime “as operated” by the Police are: (i) ultra vires Sections 25 and 25A of the Organized and Serious Crimes Ordinance (OSCO) (Cap. 455); and (ii) incompatible with Articles 6 and 105 of the Basic Law, as the Regime as operated by the Police is not prescribed by law and is disproportionate

Cyber fraud remains a significant risk to businesses and individuals. In the 11 months to November 2021, over 500 phishing scams, worth more than HKD 1.4 billion in losses, were reported to the Hong Kong Police. The Police have been developing and will soon launch a free software to assist businesses in identifying phishing scams.

We have seen a noticeable increase in the prevalence and sophistication of cyber fraud incidents in recent years. This has led to a substantial rise in civil recovery actions, and as a result, we now have the benefit of key learnings from recent decisions by the Hong Kong Courts and other jurisdictions. This alert discusses some of the common themes and challenges victims of fraud may face in civil recovery actions, particularly in cases involving allegedly “innocent” recipients of tainted funds and competing victims pursuing recovery from the same finite pool of funds.

The SFC’s continued clampdown on corporate fraud and misconduct The Securities and Futures Commission (SFC) has frequently emphasized its commitment to combatting corporate fraud and misconduct in recent years. Continuing with these efforts, in July 2019, the SFC issued a Statement on the Conduct and Duties of Directors when Considering…