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LNC Regime Survives Judicial Scrutiny: Tam Sze Leung Case Affirms Anti-Money Laundering Measures
Background
The case, "Tam Sze Leung & Ors v. Commissioner of Police," heard in the High Court of the Hong Kong Special Administrative Region, revolves around the issuance and implications of Letters of No Consent (LNCs) under the Organised and Serious Crimes Ordinance (OSCO), Cap 455. The applicants, Tam Sze Leung, Tam Chung Wai, Kong Chan, and Lee Ka Lo, sought judicial review of the Commissioner of Police's decision to issue LNCs that effectively froze their bank accounts.
Facts of the Case
The applicants are members of the same family, suspected by the Securities and Futures Commission (SFC) of engaging in stock market manipulation from September 2018 to November 2020. The SFC believed that they were involved in money laundering, leading to a referral to the police. Consequently, the police issued LNCs to several banks, including HSBC, Hang Seng Bank, Bank of China Hong Kong, and Bank of East Asia, which resulted in the freezing of the applicants' accounts containing approximately HK$30 to HK$40 million.
Legal Issues
Ultra Vires Argument: The applicants contended that the LNC regime operated by the police under OSCO was ultra vires, meaning beyond the powers conferred by the law, and improper.
Constitutional and Human Rights Compliance: They argued that the LNCs did not comply with the constitutional requirements of the Basic Law (BL) and the Hong Kong Bill of Rights (BOR), infringing on their rights to property and fair trial.
Procedural Fairness: The applicants claimed procedural unfairness as they were not given notice of the decision to issue the LNCs, nor an opportunity to make representations or an independent hearing.
Proportionality of Restrictions: The applicants questioned whether the restrictions imposed by the LNC regime were necessary and proportionate, as upheld in a prior case, Interush Ltd v. Commissioner of Police.
Court's Analysis
The court considered whether the judicial review application was rendered academic due to the withdrawal of the LNCs following the application for Restraint Orders. Despite the LNCs' withdrawal, the court decided to proceed with the review, emphasizing the broader public importance of the issues raised and the continuing relevance of the No Consent Regime.
The court examined the legality and constitutionality of the LNC regime under OSCO. It reviewed the police's authority to freeze bank accounts without a court order and the sufficiency of safeguards over such powers. The court acknowledged the applicants' significant financial interests and the impact of the LNCs on their fundamental rights to property and due process.
Decision
The High Court upheld the existing LNC regime, rejecting the applicants' challenges. The court found that the regime was neither ultra vires nor unconstitutional. It deemed the procedural mechanisms adequate and the restrictions proportionate to the objectives of combating serious crimes and money laundering. The court referenced the precedent set in Interush, maintaining that the regime's operation was a necessary and proportionate restriction on the right to enjoy private property.
Implications
The case reaffirms the legal framework under OSCO, allowing the police to issue LNCs as part of Hong Kong's anti-money laundering measures. It underscores the balance between individual property rights and the public interest in preventing and prosecuting serious financial crimes. The decision also highlights the judiciary's role in scrutinizing executive actions while respecting legislative intent and public policy considerations.
In conclusion, "Tam Sze Leung & Ors v. Commissioner of Police" is a significant case that delineates the scope and limitations of police powers under Hong Kong's anti-money laundering laws, reinforcing the legal and constitutional validity of the LNC regime.
- The Hong Kong High Court ruled that the LNC regime, used by police to freeze bank accounts suspected of involvement in money laundering, is legal and constitutional.
- The decision stemmed from a case where applicants challenged the LNCs issued against their bank accounts, claiming the regime was ultra vires (beyond legal power) and violated their rights.
- The ruling reinforces the legal framework for LNCs in Hong Kong, strengthening the tools available to authorities in their fight against money laundering.
