In the recent case of Tam Sze Leung & Ors v. Commissioner of Police [2021] HKCFI 3118, the Court of First Instance held that (1) the Commissioner of the Police acted ultra vires in using the No Consent Regime to informally freeze bank accounts containing suspected proceeds of crime, (2) the No Consent Regime is not prescribed by law; and (3) the No Consent Regime disproportionately interferes with property rights. The implications of this decision remain to be seen. Financial institutions should continue to engage in due diligence with respect to their account holders, monitor transactions for suspicious activities, and file Suspicious Transactions Reports, as appropriate.

Recap of the No Consent Regime

To recap:

  • Section 25 of the Organized Serious Crime Ordinance (Cap 455) (OSCO) prohibits dealings with property known or reasonably believed to represent proceeds of crime.
  • Section 25A of OSCO requires anyone to notify the authorities where they know or suspect any property to represent proceeds of crime - this is typically done by filing a suspicious-transaction report (STR).
  • Section 25A(2) of OSCO provides a defence for a notifier to continue dealing with those suspected proceeds of crime when the authorities, after receiving the STR, have given their consent by way of a letter of consent.

A practice has developed over the years whereby the Police would issue a letter of no consent (LNC) to expressly withhold consent for dealing with funds which are suspected to be proceeds of crime and thereby place financial institutions at risk of violating section 25 of OSCO if they decide to continue dealing with those funds. According to the Force Procedure Manual of the Police (FPM), the Police shall make the best endeavour to apply for a restraint order as soon as practicable following the issuance of a LNC, and the LNC should last no more than six months from the date of issue. 

Understandably, financial institutions typically would err on the side of caution and refrain from dealing with funds which are subject to a LNC. It has therefore been said that the No Consent Regime effectively operates like an informal freezing order. 

In Tam, the Court of First Instance was asked to decide whether the No Consent Regime empowers the Police to informally freeze bank accounts, leaving one's fundamental right to use his/her property in the form of funds held in a bank account under-protected. 


The applicants are four members of the same family and held a combined balance of around HK$30 million to HK$440 million in twelve accounts across four banks. In December 2020, the applicants discovered that they were unable to withdraw funds from those accounts. It later transpired that the banks were requested by the Police to submit STRs in respect of those accounts before LNCs were issued by the Police.

The applicants were arrested for the offence of money laundering on 4 March 2021, and it was not until October 2021, around ten months after LNCs were issued, that the Police served restraint orders to replace the LNCs in place.

The Decision

Ultra vires

The Commissioner sought to justify the No Consent Regime as a "temporary stop-gap measure" to ensure that funds which constitute suspected proceeds of crime are informally frozen pending further investigation and the Police's application for a court order to restrain dealings with those funds. The Court disagreed and held that the No Consent Regime was not just a temporary stop-gap measure, even on the assumption that restraint orders were expected to be obtained within six months after the LNCs were issued.  

The Court further held that it is highly unlikely that the legislature intended the No Consent Regime to confer 'unregulated and informal freezing powers' on the Police without any judicial oversight and that it is "implausible that the legislature could have simultaneously consciously enacted a secret, informal and unregulated asset freezing power" along with the restraint order which is subject to judicial supervision. Accordingly, the Court held that the No Consent Regime as operated by the Commissioner is ultra vires.

Not prescribed by law

The Court also held that the No Consent Regime as operated is not prescribed law. There is no clarity or certainty to be found in OSCO or the FPM as to the scope of the Commissioner's power under the No Consent Regime and the manner in which such power is exercised, and there is no adequate effective safeguard against abuse. The Court also observed that the Police's failures in relation to the LNCs considered in Tam are indicative of systemic problems.        

Disproportionate interference with rights

In addition, the Court held that the No Consent Regime can operate without temporal limitation yet with only internal intermittent review of justification; therefore, it cannot be said that a reasonable balance has been struck between the wider societal benefits of the encroachment caused by the No Consent Regime and the restrictions on constitutionally protected property rights enjoyed by individuals.  Hence, the Court held that the No Consent Regime failed the proportionality assessment.


Whilst the Court has not determined the precise relief to be granted to the successful applicants, it has foreshadowed that any relief granted would be non-prescriptive as to how the constitutional problems concerning the No Consent Regime as identified by the Court should be removed or resolved. Notably, this decision is subject to appeal. Therefore, it remains to be seen what impact this will have on how the Police will operate the No Consent Regime going forward.

In the meantime, it is advisable that financial institutions continue to conduct all required due diligence on their customers and record activities in accordance with all applicable anti-money laundering rules and report any suspicious transactions to the authorities as soon as practicable after the suspicion arose.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.