|
CACV 152/2022, [2023] HKCA 537
On Appeal From [2021] HKCFI 3118
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
CIVIL APPEAL NO 152 OF 2022
(ON APPEAL FROM HCAL NO 191 OF 2021)
____________
| BETWEEN |
|
|
| |
TAM SZE LEUNG |
1st Applicant |
| |
TAM CHUNG WAI |
2nd Applicant |
| |
KONG CHAN |
3rd Applicant |
| |
LEE KA LO |
4th Applicant |
| |
|
(Respondent) |
|
and
|
| |
COMMISSIONER OF POLICE |
Respondent |
| |
|
(Appellant) |
____________
| Before: |
Hon Cheung, Yuen and G Lam JJA in Court |
| Date of Hearing: |
9 February 2023 |
| Date of Judgment: |
14 April 2023 |
_________________
J U D G M E N T
_________________
Hon G Lam JA (giving the Judgment of the Court):
I. Introduction
1. The Applicants sought to challenge, by way of judicial review, the decision of the Commissioner of Police (“Commissioner”) to issue and maintain “letters of no consent” in respect of their bank accounts under the Organized and Serious Crimes Ordinance (Cap. 455) (“OSCO”). In his judgment handed down on 30 December 2021 (“Judgment”),[1] Coleman J held that three out of six grounds advanced by the Applicants were made out. In a further decision on relief and costs dated 23 March 2022,[2] the judge granted the following declaration in favour of the Applicants:
“ The Letters of No Consent were, and the No Consent Regime as operated by the Commissioner (‘the Commissioner’) is:
(1) ultra vires sections 25 and 25A of OSCO; and
(2) incompatible with articles 6 and 105 of the Basic Law, because the No Consent Regime as operated by the Commissioner is not prescribed by law and is disproportionate.”
2. The Commissioner now appeals to this court.
II. The relevant provisions of OSCO
3. OSCO was first enacted in 1994, creating a general money laundering offence as an extension from the equivalent provision in the Drug Trafficking (Recovery of Proceeds) Ordinance (Cap 405) which related to drug money. In 1995, both Ordinances were amended, with new sections 25 and 25A substituted. OSCO, together with cognate legislation such as the Drug Trafficking (Recovery of Proceeds) Ordinance and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap 615), operate as measures taken by Hong Kong against the backdrop of a global effort in combating money laundering, terrorist financing and other related threats to the integrity of the international financial system, which is coordinated by the Financial Action Task Force, an inter-governmental organisation that sets global standards and promotes measures for these purposes.
4. The provisions of OSCO that are central to this appeal are sections 25 and 25A which form a scheme. Section 25(1) and (2) provide:
“ 25. Dealing with property known or believed to represent proceeds of indictable offence
(1) Subject to section 25A, a person commits an offence if, knowing or having reasonable grounds to believe that any property in whole or in part directly or indirectly represents any person’s proceeds of an indictable offence, he deals with that property.
(2) In proceedings against a person for an offence under subsection (1), it is a defence to prove that—
(a) he intended to disclose to an authorized officer such knowledge, suspicion or matter as is mentioned in section 25A(1) in relation to the act in contravention of subsection (1) concerned; and
(b) there is reasonable excuse for his failure to make disclosure in accordance with section 25A(2).”
5. “Dealing” with property is given a wide definition in section 2(1) to include:
“ (a) receiving or acquiring the property;
(b) concealing or disguising the property (whether by concealing or disguising its nature, source, location, disposition, movement or ownership or any rights with respect to it or otherwise);
(c) disposing of or converting the property;
(d) bringing into or removing from Hong Kong the property;
(e) using the property to borrow money, or as security (whether by way of charge, mortgage or pledge or otherwise)”
6. Section 25A provides:
“ 25A. Disclosure of knowledge or suspicion that property represents proceeds, etc. of indictable offence
(1) Where a person knows or suspects that any property—
(a) in whole or in part directly or indirectly represents any person’s proceeds of;
(b) was used in connection with; or
(c) is intended to be used in connection with,
an indictable offence, he shall as soon as it is reasonable for him to do so disclose that knowledge or suspicion, together with any matter on which that knowledge or suspicion is based, to an authorized officer.
(2) If a person who has made a disclosure referred to in subsection (1) does any act in contravention of section 25(1) (whether before or after such disclosure), and the disclosure relates to that act, he does not commit an offence under that section if—
(a) that disclosure is made before he does that act and he does that act with the consent of an authorized officer; or
(b) that disclosure is made—
(i) after he does that act;
(ii) on his initiative; and
(iii) as soon as it is reasonable for him to make it.
(3) A disclosure referred to in subsection (1)—
(a) shall not be treated as a breach of any restriction upon the disclosure of information imposed by contract or by any enactment, rule of conduct or other provision;
(b) shall not render the person who made it liable in damages for any loss arising out of—
(i) the disclosure;
(ii) any act done or omitted to be done in relation to the property concerned in consequence of the disclosure.
(4) In the case of a person who was in employment at the relevant time, this section shall have effect in relation to disclosures to the appropriate person in accordance with the procedure established by his employer for the making of such disclosures as it has effect in relation to disclosures to an authorized officer.
(5) A person commits an offence if, knowing or suspecting that a disclosure has been made under subsection (1) or (4), he discloses to any other person any matter which is likely to prejudice any investigation which might be conducted following that first-mentioned disclosure.
(6) In proceedings against a person for an offence under subsection (5), it is a defence to prove—
(a) that he did not know or suspect that the disclosure concerned was likely to be prejudicial in the way referred to in that subsection; or
(b) that he had lawful authority or reasonable excuse for making that disclosure.
……”
7. “Authorised officer”, referred to in section 25A(1) and (2)(a), is defined in section 2(1) to mean:
“ (a) any police officer;
(b) any member of the Customs and Excise Service established by section 3 of the Customs and Excise Service Ordinance (Cap. 342); and
(c) any other person authorized in writing by the Secretary for Justice for the purposes of this Ordinance”.
III. The procedures adopted by the police
8. As will be described in greater detail below, the above provisions have a direct impact on financial institutions such as banks. Where they apply, section 25(1) potentially criminalises banks for operating their customers’ accounts, and section 25A(1) requires them to make disclosure to an authorised officer. Such disclosure is in practice referred to as a suspicious transaction report (“STR”). Within the Government, the Joint Financial Intelligence Unit (“JFIU”), set up in 1989 and jointly staffed by the police and the Customs & Excise Department with a Superintendent of the police as its Head, is the designated unit to receive and analyse STRs and disseminate them to local or overseas law enforcement agencies or financial intelligence units worldwide, in accordance with the recommendations of the Financial Action Task Force.
9. Under section 25A(2)(a) an authorised officer may give consent for an act to be done which would otherwise attract criminal liability under section 25(1). Although as defined in OSCO an “authorised officer” includes any police officer, by internal arrangement only the Head of JFIU may exercise that power to give or withhold consent. The power is exercised after an STR is received. Where consent is not given, the authorised officer is not required by law to take any positive step, but in practice the Head of JFIU issues a letter, which has generally been referred to as a Letter of No Consent (“LNC”), to the relevant financial institution that filed the STR. The typical content of an LNC may be seen in §25 below. Between 2018 and May 2021, JFIU received a total of 207,146 STRs, less than 2% of which resulted in the issuance of LNCs.
10. The procedures followed by the police and the JFIU after receiving an STR are set out in Chapter 27-19 of the Force Procedures Manual (“Manual”) headed “ ‘No Consent’ Mechanism in respect of Property held by Financial Institutions”. The material paragraphs have been quoted in the Judgment.[3] A summary suffices for present purposes:
(1) Upon receiving an STR from a financial institution, the JFIU may send it to an appropriate investigating unit in the police if it requires follow-up action. The Superintendent commanding that unit (“SPI”) has to decide within 2 working days (extendable in exceptional circumstances) whether consent for dealing with the property should be refused and, if so, to make a written request, with justifications, to the JFIU for an LNC to be issued. If the SPI does not act within 2 working days, the JFIU will issue a letter giving consent for the financial institution to deal with the property.
(2) The underlying principle is that the use of the “No Consent” mechanism must be necessary, proportionate and reasonable. In the deliberation, the SPI may consider the prospect of obtaining a confiscation order (which in turn requires the...
| 
