Hong Kong, renowned as a major global financial center, has witnessed a concerning surge in international internet fraud in recent years. Victims of such fraudulent activities often find themselves wiring money to Hong Kong-based bank accounts held by deceitful individuals. These ill-gotten funds are then immediately transferred through a series of international transactions, rendering them exceedingly difficult to trace and resulting in substantial losses for the victims.
Author: Stefan Schmierer, Managing Partner
Fortunately, a substantial and formidable tool in the battle against internet fraud emerged through the Hong Kong Police's utilization of a "Letter of No Consent (LNC)." Once a victim becomes aware of the fraudulent scheme, they can promptly file an online report with the Hong Kong Police. Subsequently, the police collaborate with the relevant bank to ascertain if any funds—either in whole or in part—remain within the fraudulent account. Upon identifying suspicious activity, an LNC is issued to the bank, alerting the bank to the potential fraudulent nature of the funds. As a result, the bank commonly freezes the associated account, affording the victim adequate time to pursue legal action and recover their funds via a civil court proceeding based on the principle of unjust enrichment.
Regrettably, the efficacy of this LNC regime was challenged in 2021 with the case of Tam Sze Leung & Ors vs. Commissioner of Police. The initial ruling by the Hong Kong court deemed the LNC regime unlawful and unconstitutional, citing infringements upon property rights as enshrined in the Hong Kong Basic Law. This decision plunged victims into uncertainty, as the fate of previously issued LNCs remained ambiguous, forcing them to resort to costly court injunctions in an attempt to freeze the fraudulent accounts. Unfortunately, at the time of filing such injunctions, victims were unaware of whether any funds still resided in the accounts or if they had already been emptied.
However, a recent turn of events has reignited hope. The Hong Kong Court of Appeal overturned the Court of First Instance decision, effectively reinstating the LNC regime and validating its alignment with existing laws, regulations, and the Hong Kong Basic Law. This crucial ruling not only brings considerable relief to victims of internet fraud but also equips local law enforcement agencies with a potent means to freeze bank accounts, fortifying their ability to combat cybercriminals.
Nevertheless, it is important to remember that the efficacy of an LNC is contingent upon the victim's expediency in uncovering the fraud and promptly reporting it to the Hong Kong Police. Fraudsters typically empty the acquired funds within a short span of one or two days, underscoring the paramount importance of swift action to safeguard one's rights after falling victim to internet fraud.
In the ever-evolving landscape of the digital world, this triumph serves as a promising beacon, demonstrating the resilience of justice in the face of deception. As the battle against internet fraud persists, this significant milestone emboldens the ongoing fight, empowering the Hong Kong appeal court to wield its authority firmly and provide respite to victims ensnared by the intricate webs of cybercrime.
Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
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