Introduction
Bank accounts are personal property, and as such we all have a duty to protect our own bank accounts. Often, people have been asked to lend their bank accounts to others such as friends or relatives for undisclosed reasons. Unbeknownst to most, this seemingly simple act may constitute a criminal offence under the Organized and Serious Crimes Ordinance (Cap. 455) (the “Ordinance”). This article will explore how this action amounts to an offence and how it can result in conviction.

Section 25 of the Ordinance
Under section 25(1) of the Ordinance, it is an offence for a person to deal with property known or believed to represent the proceeds of an indictable offence. This is commonly known as a money laundering offence.

To establish the offence, the prosecution does not need to prove that the property did in fact represent the proceeds of an indictable offence. It is also not necessary for the prosecution to specify the underlying offence. 

In the context of money laundering through bank accounts, the prosecution only needs to prove that (1) the defendant had dealt with the monies in their accounts and (2) the defendant knew, or had reasonable grounds to believe, that the monies in the accounts were proceeds of an indictable offence.   The “reasonable grounds to believe” limb is intended to ensure that liability cannot be escaped by turning a blind eye.

Lending one’s bank account to others may already be considered as “dealing” since the major, if not sole, function of a bank account is for deposit and withdrawal of money. When the court determines whether a defendant has the “reasonable grounds to believe”, it has to take into account two factors, one objective and one subjective. Firstly, the objective factor is whether a reasonable person with common sense and in his right thinking (a reasonable man) would think that the circumstances suffice to cause him to believe that the money is the proceeds of an indictable offence. Secondly, the subjective factor is whether the defendant knew the existence of those circumstances.

Case Illustration
In the case of HKSAR v Lau Sui Hing CACC 111/2008, the Defendants lent their bank accounts to a third person known as Ah Chi. Subsequently, illegal proceeds were deposited and then withdrawn from their accounts. The Defendants alleged that they were just helping a friend and as a result, they did not inquire why Ah Chi needed to borrow their accounts. They also alleged that they had no knowledge about the transactions in the bank accounts. 

At trial, the judge dismissed the explanations given by the Defendants. The judge also took into account the facts that the Defendants did not inquire with the bank after their accounts were closed down as a result of abnormal transactions and did not report the matter to the police.

The judge adopted the proposition stated in the case of HKSAR v Wong Chor Wo CACC 314/2006:

“In the normal course of events, if a man allows another person to use his bank accounts, to deposit and withdraw funds, in the absence of evidence to the contrary, the inevitable inference will arise that the holder of the bank account has reasonable grounds to believe that the funds passing through the account represent the proceeds of an indictable offence.”

As a result, the judge proceeded to draw the aforesaid inevitable inference and convicted the Defendants.  

Conclusion
As can be seen with the above case illustration, when a person lends his bank account to another person, it is likely that the court will draw the inference that the person has reasonable grounds to believe that the monies in the account represent proceeds of an indictable offence (bearing in mind that the standard is an objective one of a reasonable man). Very strong evidence is required before the inference can be rebutted and apparently, the lack of knowledge of the transactions involved does not suffice as a defence.

Perhaps the reasoning behind the inference is that a reasonable person would not naturally lend his account, which is a valuable personal property, to another for handling without proper knowledge of what it will be used for.

In view of the above, it is best to avoid lending our bank accounts to anyone for whatever reason.  In society, one might be asked by relatives or close friends to lend bank accounts.  Whilst the temptation stands to succumb easily due to trust, it is important to remember that the simple act of lending a bank account may already amount to an offence and lead to conviction.

For enquiries, please contact our Litigation & Dispute Resolution Department:

E: criminal@onc.hk

W: www.onc.hk

T: (852) 2810 1212

F: (852) 2804 6311

IMPORTANT: The law and procedure on this subject are very specialized and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.