Businesses in Hong Kong are responsible for ensuring they adhere to strict civil and criminal rules and regulations, such as the prevention of fraud, money laundering and bribery, and securities laws. This is how to make sure your company complies and what to do if your business is under investigation.

Among many, the following government agencies are responsible for the enforcement of civil and criminal laws and regulations appliable to businesses:

• The Securities and Futures Commission (SFC) is the independent statutory body charged with regulating and governing the securities and futures markets in Hong Kong

• The Commercial Crime Bureau (CCB) investigates serious commercial and financial crimes, forgery of monetary instruments, identity documents, payment cards, currencies and coins

• The Organised Crime and Triad Bureau (OCTB) investigates organised crime and syndicated criminal acts, including money laundering

• The Independent Commission Against Corruption (ICAC) has broad legal powers to investigate and prosecute corruption under three specific rules: the Independent Commission Against Corruption Ordinance (ICAC Ordinance), the Prevention of Bribery Ordinance (POBO) and the Elections (Corrupt and Illegal Conduct) Ordinance

There are statutes within Hong Kong law that allows these authorities to investigate and refer cases for prosecution. Each agency has different powers – details regarding the scope of each agency can be found here.

Civil v criminal charges

Corporations, being separate legal entities, can be held criminally accountable for most offences unless imprisonment is the only penalty for such offences, or the offences (e.g. assault or murder) can only be committed by a natural person. 

In some cases, law enforcement agencies (the CCB and ICAC) and government authorities (SFC) can investigate the same business simultaneously and bring different charges. Civil charges can also be brought against individuals which, depending on the court (magistrate, district or high court), can impose prison sentences of varying lengths, including up to life imprisonment (subject to the maximum penalty permitted by law for the respective offence).

Triggering events

Government authorities can start civil or criminal investigations if they have received a formal complaint or information that they believe indicates illegal activities or market misconduct. The SFC also has its own system in place to monitor the stock market with real-time transactional data that can identify irregular market activities and trading patterns. The ICAC can decide to initiate an investigation based on anonymous reports or media articles. Investigations can also be initiated on the evidence of whistle blowers, who have special protection in Hong Kong law when they become witnesses for government authorities and/or in relation to criminal prosecutions. 

In most cases, investigations are not made public unless formal charges have been brought or after individuals have been arrested.

How does a company know it’s being investigated?

In practice, investigations are usually covert to ascertain the credibility of informers and the information provided before the government authority approaches the business. During the covert phase, businesses may be subject to undercover surveillance of communications and movement of individuals. When a target business becomes aware of a government investigation it is recommended to engage legal counsel as soon as possible and carry out its own comprehensive investigation to develop its own understanding of the facts. Depending on the accusation, it may be necessary to engage other professionals such as forensic accountants or independent financial advisors.

Government agencies can use search warrants and production orders to request access to business information, which can be in the form of physical documents and electronic data. Non-compliance may rise to contempt of court. However, businesses may be able to refuse the government’s demand for materials on the grounds of legal professional privilege (LLP), or request that some documents are withheld from the investigation.

If employees have been summoned to testify against their employer, it is recommended employees obtain their own legal counsel.

Cooperating with the investigation

There are no specific mechanisms through which businesses can cooperate with investigations; businesses can decide the format, timing and degree of cooperation, as well as whether or not to self-report potential wrongdoings. However, assisting in an investigation and wilfully surrendering to the authorities may be seen as mitigating circumstances, which could be favourable if the case goes to trial. Cooperation is generally regarded as full and frank disclosure.

This article is only intended to be an overview of investigations in Hong Kong and does not constitute legal advice. To discover more please read this in-depth guide we have produced in conjunction with Lexology GTDT.

Perun Consultants’ team of experts can provide independent, financial advice and forensic accounting across jurisdictions. Contact us to find out how we could help you during an investigation.