Courts clamp down on ancillary bribery offences
Making a false report to Hong Kong's anti-corruption agency, the Independent Commission against Corruption (ICAC), is a criminal offence under the Prevention of Bribery Ordinance (POBO). It is also an offence under the POBO to disclose the identity of someone under an ICAC investigation. The Hong Kong courts have recently convicted individuals for these offences.
A woman interviewed by the ICAC on suspected drugs charges, who alleged that the arresting police officers accepted a bribe from a third party to frame her, has been jailed for five months. Subsequent ICAC enquiries revealed that the woman may have been lying and on 8 March 2018, she admitted to knowingly making a false report. In sentencing, Principal Magistrate Mr Peter Law Tak-chuen noted that it was a serious offence to fabricate a false report against police officers.
In a separate case, a Hong Kong court found a former vice president (VP) and a client of a bank guilty of bribery, while the former VP’s mother was convicted of disclosing the identity of a person under an ICAC investigation. The former VP accepted from the client various advantages (including accommodation at hotels in Macao and Guangzhou and free use of private cars) as rewards for processing applications for and/or maintaining the credit facilities in relation to the companies controlled by the client. The former VP's mother suspected that the former VP was the subject of investigation based on knowledge of the ICAC enquiry acquired from her job, and disclosed the matter to the former VP. On 5 October 2018, the former VP and client were each jailed for nine months. The former VP's mother was sentenced to one month's imprisonment, suspended for one year.
SFC publishes AML/CFT inspection findings and urges intermediaries to ensure compliance
The Securities and Futures Commission (SFC) has issued a circular highlighting both deficiencies and good practices observed in relation to anti-money laundering and counter financing of terrorism (AML/CFT) compliance by licensed corporations (LCs) and associated entities (AEs). The observations were made over the past year from the SFC's review of AML/CFT measures, policies, procedures and controls (AML/CFT systems) belonging to 13 LCs during thematic inspections and around 270 LCs during routine inspections.
The SFC reminded LCs and AEs that they are required to critically review their AML/CFT systems in light of the circular and take immediate action to rectify any deficiencies. In particular, the SFC focused on the following five main areas and reiterated its requirements:
Institutional risk assessment. Customer risk assessment. Initial and ongoing customer due diligence. Sanctions screening systems and mechanisms. Suspicious transactions monitoring and reporting.
For more information see our bulletin here. Both the SFC and the Hong Kong Monetary Authority have released new AML/CTF guidelines which come into effect on 1 November 2018. See here for further details.
Hong Kong Court of Appeal orders retrial in insider dealing case
The SFC has announced that the Court of Appeal has allowed its appeal against the Market Misconduct Tribunal's (MMT) decision that Mr Cheng Chak Ngok had not engaged in insider dealing in the shares of listed company, China Gas Holdings Limited (China Gas) in 2011. Mr Cheng was an executive director, chief financial officer and company secretary of another listed company which had announced an offer to acquire China Gas in 2011 (see our earlier update regarding the MMT decision).
The Court of Appeal held that the MMT had applied the wrong standard of proof in deciding whether Mr Cheng had dealt in the China Gas shares. The court took the view that the SFC had adduced sufficient evidence for the MMT to decide the issue, and that the MMT had incorrectly applied the criminal standard of proof, by requesting the SFC to adduce evidence to rule out all possibility that someone else might be involved in the dealing.
The court therefore ordered that the matter be remitted to a differently constituted MMT to determine the sole question of whether Mr Cheng had dealt in the shares of China Gas. Other elements of insider dealing had been established and were not challenged in this appeal.