HONG KONG Law and Practice Contributed by: George Lamplough, Edward Beeley, Vanessa Cheng and Curtis Pak, Holman Fenwick Willan
1.3 Claims Against Parties Who Assist or Facilitate Fraudulent Acts Criminal and civil claims can be brought against par - ties who assist or facilitate fraudulent acts. Banks When a bank is put on notice of a fraud and that its customer holds funds on constructive trust, the bank can be liable in damages for breach of that construc - tive trust if it subsequently moves the funds. It is there - fore important to put the bank on notice of the victim’s equitable proprietary interest in the funds as soon as a fraud is discovered. In PT Asuransi Tugu Pratama Indonesia Tbk v Citibank NA [2023] HKCFA 3 (in which Holman Fenwick Willan acted for the successful account holder), the Court of Final Appeal held that the defendant bank was liable for monies paid out of the plaintiff’s bank account on the dishonest instructions of the plaintiff’s authorised signatories. The Court held that the plaintiff’s debt claim for the balance of the account before it was fraudulently emptied, and the account closed, was good in law, and that the fraudulent transfers were nul - lities, and the debt claim was not statute-barred. The Court held that the six-year limitation period started to run when the bank’s customer demanded payment of the debt and not when the bank closed the account without the authority of its customer. The Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap 615) (AMLO) empowers the police to launch criminal proceedings against banks for ignoring or assisting in money laundering. Account Holders The architects of frauds rarely hold the bank account into which victims mistakenly remit their funds. Rath - er, criminal rings will recruit “money mules” to set up and manage Hong Kong bank accounts to launder the proceeds of fraud. These account holders frequently live in Mainland China, beyond the jurisdiction of the Hong Kong courts and police. Such bank accounts are usually corporate accounts held by shell companies, with nominal share capital and a single director and shareholder. The signatories are usually individuals residing in Mainland China, and
the account-opening documents will usually state low monthly salaries. Tracking the signatories down for arrest is not just difficult, because they are outside the jurisdiction, but of limited utility when found. Civil claims against the account holder company are limited to proprietary claims against the company (or individual bank account holder, if the account is not a corporate account), such as money had and received and unjust enrichment, to recover any remaining funds. Those who knowingly assist in money-laundering operations risk being charged with several criminal offences, such as conspiracy under Section 159A of the Crimes Ordinance (Cap 200) or the common law offence of conspiracy to defraud. Civil causes of action commonly pleaded against accessories to wrongdoing include knowing receipt and dishonest assistance. In claims for dishonest assistance, the dis - honesty must relate to the assistance of the breach of trust; the plaintiff does not need to establish that the defendant had knowledge of the relevant breach of trust ( China Medical Technologies Inc (in liquidation) v Wu Xiaodong and others [2026] HKCFI 276). The Organised and Serious Crimes Ordinance (Cap 455) (OSCO) empowers the police to charge individu - als who deal with property that they know or have reasonable grounds to believe are the proceeds of an indictable offence. The prosecution may also apply for a restraint order to prohibit a person from dealing with their property (Section 15, OSCO). Restraint orders can effectively freeze bank accounts holding the proceeds of fraud. Second-, Third- and Higher-Level Recipients There are usually several rounds of dissipation. First- level recipients usually quickly transfer the funds on to second-level recipients, who often then transfer the funds onwards. These higher-level recipients tend to have less knowledge of the underlying fraud than those from whom they received the funds. Victims may be entitled to bring a proprietary claim in equity over the funds found in the hands of the sec - ond- or third-level recipients. Recipients often argue
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