HONG KONG SAR, CHINA Law and Practice Contributed by: George Lamplough, 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 parties 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 constructive trust if it subsequently moves the funds. It is therefore important to put the bank on notice of the victim’s equitable propri - etary 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 signa - tories. 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, the fraudulent trans - fers were nullities, 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-Ter - rorist Financing Ordinance (Cap 615) (AMLO) empowers the police to launch criminal pro - ceedings 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
power to act on their behalf. There is not nec - essarily a requirement for a pre-existing legal, contractual or fiduciary obligation. In Attorney General of Hong Kong v Reid [1994] 1 AC 324, the defendant abused his public office by receiving bribes in exchange for preventing criminal prosecutions. The Privy Council (on appeal from Hong Kong) held that where fidu - ciaries receive bribes in breach of their fiduciary duties, the law regards the fiduciaries as con - structive trustees who hold the bribes on trust for the benefit of their principals. The principal can therefore recover the bribe, as well as any property acquired with it, or any profits made through its use. The Hong Kong courts followed Reid in Sec - retary for Justice v Hon Kam Wing & Others [2003] 1 HKLRD 524, where the courts held that equity regards the bribe as a legitimate payment intended for the principal. The payment must be paid over to the principal immediately upon receipt, and equity imposes a constructive trust over the funds or property paid as a bribe for the benefit of the principal. A principal or employer can also sue corrupt agents or employees for breach of their employ - ment or service contracts. Criminal Sanctions The primary anti-corruption legislation in Hong Kong is the Prevention of Bribery Ordinance (Cap 201) (POBO), which is enforced by the Inde - pendent Commission Against Corruption (ICAC). The POBO prohibits the offer and acceptance of bribes in both the public and private sectors and establishes a series of criminal offences for corrupt conduct.
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