22 February, 2017
On 12 December 2016, the South China Morning Post reported that fraudsters have used Hong Kong to take almost HK$1.5 billion in email scams during the first 9 months of 2016.
Parties are tricked into making payments into incorrect accounts based on outright fraud. Sometimes phishing techniques are used to trick people to reveal sensitive information, such as passwords. While it seems that the number of reported incidents has reduced from 2015 to 2016, the money value has increased significantly. The sums taken can be enormous – in late 2016 there was a report of a HK$500 million transfer made as a result of email fraud.
Our team has assisted many overseas clients who have been the victims of substantial email fraud. This usually involves a fund flow tracing exercise through a complex web of bank accounts held by multiple corporate vehicles to find out what happened to the funds and ultimately to recover the funds. We have found that these fraudulent schemes are usually carefully planned, sophisticated and show meticulous attention to detail. We have recently been retained by a European bank to take urgent steps to recover payments totaling over €50 million arising from an email scam commonly known as ‘CEO fraud’, although email scams involving recovery in the range of US$40,000 – US$100,000 are particularly common.
What happens once you realise that your money has been taken by a scam or fraud, and what can you do to get back your money?
Sometimes, funds can be recovered and all is not lost. You need to act fast for recovery of funds. If the bank account into which payment was made is located in Hong Kong, the first step should be to report the matter to the Hong Kong police as soon as possible. If the Hong Kong police are satisfied that the funds in the account may be the proceeds of crime, they may direct the applicable bank to place a hold, or a freeze, on the funds. This can happen quickly and it can be a cost effective initial step to preserve your funds. An additional measure can be to take matters into your own hands and seek an injunction from the court to freeze the moneys, which may be preferred in some circumstances. There may also be need to apply for a disclosure order from the court to find out how much money is left in the bank account, and see the flow of money in and out of the relevant account.
To recover money from the fraudster’s account in Hong Kong, you will need a court order. You have to act fast as there may be others who have been tricked, who are also after money in the same bank account. Moneys are often paid out on a first-come first-served basis. How to go about recovery is a matter that your lawyers will be able to advise, but a common procedure is to file a writ on the fraudster, which is often a company, and obtain a garnishee order after judgment is obtained.
If no claims are brought against the monies in the account, the Hong Kong Government may apply to the Court to confiscate the funds.
We often see clients who have been the victims of fraud and have had the Hong Kong police freeze money in an account. Very often there is genuine hope of recovery, and our experience during 2016 has been that recovery of some or all of the funds is common. The sooner you act, the better the chances of recovery are.
Our litigation and dispute resolution lawyers have been providing competitively priced real solutions to assist an increasing number of particularly overseas clients recover moneys taken from them through fraud.
For further information, please contact:
Damien Laracy, Partner, Laracy & Co in association with Hill Dickinson Hong Kong LLP
damienlaracy@laracyco.com
