The Hong Kong Court Of Appeal Considers Constitutionality Of The Requirement To Disclose Suspicious Transactions

Author:Mr Gareth Thomas, William Hallatt, Kyle Wombolt and Dominic Geiser
Profession:Herbert Smith Freehills
 
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In Interush Limited & Anor v The Commissioner of Police, the Commission of Custom & Excise and Mak Wing Yip Cyril, Superintendent of Police [2019] HKCA 70, the Court of Appeal (“Court”) dismissed a challenge to the constitutionality of an aspect of Hong Kong's money laundering legislation.

The Court held that the statutory regime which obliges banks to disclose suspicious transactions relating to property known or believed to represent proceeds of a crime is not unconstitutional. In the circumstances of this case, the Court held that although property rights under the Basic Law were engaged, the regime was no more than necessary for the legitimate purpose and societal benefit of anti-money laundering and a reasonable balance had been struck.

Facts

On 1 November 2013, alerted by newspaper coverage, officers of the Commercial Crime Bureau of the Hong Kong Police (“CCB”) commenced an investigation into Interush for promoting an alleged pyramid scheme. If a bank reasonably suspects that the credit balance in an account are the proceeds of crime, then it is legally obliged under section 25 of the Organised and Serious Crimes Ordinance (Cap 455) (“OSCO”) not to deal with it. As a result, various bank accounts held by Interush at different banks were frozen following the issuance of letters of “no consent” by the Joint Financial Intelligence Unit (“JFIU“). CCB's investigation led to the arrest of 5 members of senior management of Interush and the CEO.

The applicants applied by way of judicial review for a declaration that sections 25(1) and 25A of the OSCO are unconstitutional for being inconsistent with the following rights under the Basic Law and/or Hong Kong Bill of Rights:

property rights; and access to court rights. The applicants also sought declarations that various decisions of the third respondent (the Superintendent of Police), the CCB and the JFIU were null and void and of no legal effect. These included decisions to withhold consent to certain banks to deal with funds in the applicants' various accounts or to maintain the “no consent” decisions.

The Court refused the judicial review, and the applicants appealed to the Court.

Property rights

Are property rights engaged?

The first issue the Court considered was whether the constitutional right to property was engaged. The Court held that section 25 of the OSCO did not engage property rights, as the section merely sets out the offence of dealing with property known or believed to be...

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