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“Justice without force is powerless; force without justice is tyrannical.” - Blaise Pascal
Introduction
Most people upon the realization that they are the victims of a cyber-fraud will panic. Question arise as to whether they should (i) contact the recipient banks, (ii) the police or (ii) get a lawyer to obtain an injunction.
Whilst all of the above are necessary steps to asset recovery, it is crucial for victims to prioritize their action.
Importance of Police Freeze (why it should be the #1 action to take)
Contacting the recipient bank without any court order will achieve little. The usual response that many victims will get is that in the absence of a Court Order, the bank will have to follow their client’s (e.g. the perpetrators) banking instructions.
Whilst to an extent is true, it should be noted that an administrative freeze can nevertheless be triggered when a bank is informed of Anti-Money Laundering (AML) risk (which can be reinforced with a police report number noting that the proceeds now in the hands of the bank is potentially derived from a crime). This scenario is illustrated in the case authority of Interush Limited v Commissioner of Police, HCAL167/2014 where the learned Justice observed that whilst a police action (in that case a JIFU “no consent” letter) will not operate to freeze the suspicious property, in practice, financial institutions will freeze the account or the suspicious property as it will reinforces the financial institution’s view on its knowledge or suspicion. Also, for any financial institution to continue to honour the customer’s instructions would constitute a criminal offence of money laundering under s.25 of the Organized and Serious Crimes Ordinance, Cap 455 (“OSCO”).
In this connection, it is pivoted here that the first thing that any victim should do is to contact the police. The reason being is that only the police will be in a position for rapid response to put a freeze in place and also provide the victim with a police reference which can in turn be forwarded to the recipient bank in order to trigger an administrative freeze as illustrated above. Lawyers will have to know how to use such information of course to be effective.
What about Civil Injunctions?
Whilst victims should consider civil injunction, it is pivoted here that such injunction should take place after the police freeze is effective (which the investigation unit should be able to confirm within days). The reason being:
Firstly, your legal costs are justified as your civil injunction will be targeting an actual amount of money within a targeted account (instead of an empty account);
Second, you can decide on proper cause of action (e.g. where the account is emptied, you can contemplate whether you want to jump to disclosure order application so as to commence tracing – spending money where it is effective); and
This will take care of the time requirements for lawyers to prepare the necessary paperwork (which takes time in order to avoid proceeding with an application that is otherwise too ‘raw’ – which can be subject to challenge and discharge).
How to File the Police Complaint – Critical Facts to Provide
One of the common features found in a large number of cyber crime cases that has been handled in the past is that a lot of clients/victims are overseas nationals/entities. A common concern is whether the report will require victims to travel to Hong Kong. The answer to this question is ‘no’.
Where a crime had involved an account located in Hong Kong, the cybercrime can be reported to the Cybercrime Unit of the Hong Kong Police Force via their online report room with the following URL:
Victim should note that owing to the fact that this portal is used for urgent cases, the number of information that can be provided then and there is limited. It is therefore essential for victims to remember putting forth the following information:
First, at the very start, state your purpose, which should be a “request for urgent police freeze of fraudster’s account”.
The next major piece of information to provide is the fraudster’s banking particulars which should include (i) the account number, (ii) the Bank’s name and branch, (iii) SWIFT code, (iv) branch address, and (v) the account holder’s name.
With what limited character limit is left, you should provide an overview of how the offence came about and how you discovered the crime. For email fraud, it will also be advisable to have the fraudulent emails organized in a chronological fashion for easy handling.
Victims should note that fraudsters operate very fast and the window of opportunity to make the report and effect a police freeze is usually quite small. Victims who are uncertain can of course also ask for legal assistance for this step (which will be faster than preparation of a full blown injunction application).
Once a police complaint is filed, other action (e.g. informing the banks that they are holding onto proceeds of a crime and applying for civil injunction) can follow.
Conclusion
In short, judgments and interlocutory decisions (whilst very important by their own right) will be meaningless if there is nothing to enforce against. It is therefore of the utmost importance for victims (and/or their legal representatives) go to the police at the earliest opportunity. The quick steps to this guide that victims should consider is therefore:
Report to the police;
Inform the banks; and finally
Obtain civil injunction (where advised).
This article is co-authored by Joshua Chu from ONC Lawyers