Insights

Hong Kong: A Checklist To Recovering Monies Transferred As A Result Of Fraud

June 29, 2020
By Timothy Loh

Businesses whose monies are stolen by scammers must act quickly to recover the funds. Where the funds have been received in a bank account in Hong Kong, court proceedings should be immediately started to freeze the account and to gain further information to enable follow-up action to be taken if the funds have been withdrawn. In this article, we provide a checklist of action items for businesses who have been defrauded with funds transferred to Hong Kong.
 

Fraudsters often target businesses through emails which are designed to deceive the recipients into transferring money. The frauds are frequently highly sophisticated demonstrating significant background due diligence into the businesses to understand the organization. Typically, these emails appear to originate from a senior executive of the organization and request an employee to transfer funds in satisfaction of an invoice. Often, if a business falls prey to a fraud and transfers funds, the fraudster will continue to perpetrate the fraud, following the first successful fraudulent email with a second and third fraudulent email, each requesting the transfer of more money.

Action Plan

If your business is the victim of this type of fraud, you must act quickly and decisively before the fraudsters move the funds beyond reach. Where the bank receiving the funds is located in Hong Kong, we suggest the following steps:

  • Contact Your Bank – Contact the transferring bank immediately to request a stop on the transfer or, if funds have already been transferred, a recall of the transfer on the basis of fraud.

  • Report to the Police – Report the fraud immediately to the Hong Kong police. The Hong Kong police operate an online cyber crime reporting facility.

  • Contact a Lawyer in Hong Kong – Retain a Hong Kong lawyer to freeze the receiving bank account and prevent the fraudsters from withdrawing the funds or, if funds have already been withdrawn, to obtain information about where the funds have been transferred so that the funds can be frozen at the transferee location.

Act Quickly

There is often a temptation for businesses to conduct an internal investigation into the fraud or to wait for the bank or the Hong Kong police to take action before contacting lawyers. This is a mistake. The police have no duty to take prompt action. While the bank is likely to freeze the account to comply with anti-money laundering laws, this may take some time. Equally, understanding how the fraud was committed is not essential to recovering the funds. Time is of the essence and every moment of delay increases the risk that the funds will be gone.

Understand The Costs

Unfortunately, the Hong Kong legal process to recover the funds is a court driven one, which means that it is inherently expensive as the court will be concerned to see that its powers are not abused to freeze bank accounts or reverse a fund transfer without consideration of the impact its orders may have on others and without assurances as to the fact that there was in fact a fraud.




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