LegCo Paper No. CB(1) 487/96-97(03)

Paper for the Bills Committee
Banking (Amendment) Bill 1996
Further Information on offences of counterfeiting stored value card value
and durability of Integrated Circuit chip of a stored value card

Introduction

At the Bills Committee meeting on 8 November, Members requested further information on :

  1. whether the offences applicable to forging credit cards are also applicable to the act of creating counterfeit value on stored value cards (SVC value); and
  2. the conditions under which the integrated circuit chip of a stored value card may malfunction.

Range of offences applicable to forging credit cards which may also be applicable to counterfeiting value on stored value cards

2. Under the Crimes Ordinance (the Ordinance), the following range of offences under Part IX of that Ordinance may have been committed by persons forging credit cards and, depending on the circumstances of the case, may also be applicable to the creation of counterfeit SVC value. However, the ultimate decision on this would be a matter for the courts.

(a) Section 71 - the offence of forgery

This section provides that a person who makes a false instrument with the intention that he or another shall use it to induce somebody to accept it as genuine, and by reason of so accepting it to do or not to do some act to his own or any other person’s prejudice, commits the offence of forgery.

Section 69(a)(v), (vi) and (vii) provide that an instrument (which includes microchip under section 68(1)(d) of the Ordinance), is "false" if it purports to have been -

"(v) altered in any respect by a person who did not in fact alter it in that respect;

(vi) altered in any respect on the authority of any person who did not in fact authorize its alteration in that respect;

(vii) made or altered on a date on which or place at which or otherwise in circumstances in which it was not in fact made or altered ......"

Section 69(b) provides that a person is to be treated as making a false instrument if he alters an instrument so as to make it false in any respect, whether or not it is false in some other respect apart from that alteration.

Therefore, sections 68(1)(d), 69(a) and 69(b), when read together, make the act of forging credit cards amounts to the making of a false instrument. Similarly, it is our view that any person who counterfeits SVC value with the two-fold intention specified in section 71 would also commit an offence under that section.

(b) Section 75 - offences of possessing a false instrument

Section 75(2) makes it an offence for any person to possess a forged credit card knowing and believing it to be false. A section 75(1) offence is committed by a person who additionally intends to use it to induce somebody to accept it as genuine and by this to do or not to do some act to his own or any other person’s prejudice. We are of the view that section 75 may also catch someone who possesses a SVC which contain counterfeit value, knowing and believing it to be false, when there is no evidence to support a charge under Sections 71 for creation of counterfeit SVC value.

(c) Section 76 - The offence of making or possessing equipment

for making a false instrument

These offences would be committed by a person who possesses equipment specially designed or adapted for counterfeiting SVC value.

3. The various offences of attempting, aiding and abetting, inciting and conspiring could also be committed by a person in respect of the above offences mentioned in (a) to (c) in appropriate circumstances. Together with the offences of false accounting and obtaining goods and services by deception under the Theft Ordinance, it is our view that there exists already in the statute books a range of offences that could catch persons involved in the process of counterfeiting SVC value.

Conditions for malfunction of stored value cards

4. In response to Members’ request, we have made further enquiries regarding the durability of smart card chips. Using the Mondex chip as an example, the resistance of the chip to different forms of disturbance is described below. (It needs, however, to be noted that the card and the chip module of a SVC need to be considered separately with respect to durability. The plastic card behaves in the same way as the credit or debit cards. The chip module (which contains the stored value) is very resistant to disturbance.)

  1. Heat - the chip is resistant to short periods at 300 degrees Celsius and sustained periods (over 2000 hours) at 175 degrees Celsius;
  2. Ultra-violet (UV) light - the chip is resistant to doses of UV radiation far in excess of those any person would be exposed to in their whole life time;
  3. X-rays and Gamma rays - the chip is resistant to levels of X rays and Gamma radiation far in excess of those that a person could safely encounter in their whole life time;
  4. Magnetic fields - data stored in the chip is unaffected by magnetic field far in excess of those encountered in any commercial or industrial application;
  5. Microwaves - normal microwave emissions do not affect the chip. In a microwave oven in the absence of moisture, the chip will be destroyed fairly rapidly. In a microwave oven with moisture the plastic will be distorted but the chip module will survive the duration normally used in microwave cookery;
  6. Washing machine - the chip will survive the hottest cycles of washing machines, although the plastic card will be distorted;
  7. Physical stress - the chip is tested to ISO standards regarding physical stress. In common with all smart cards, the silicon in the chip is vulnerable to excessive stress. However, a card handled normally should not be physically damaged;
  8. Vibration - the chip and the card can withstand stresses greater than 20 times those required for military electronic systems; and
  9. Humidity - the chip is routinely tested to so called "Pressure Cooker" testing, i.e. 300 hours at 85 degrees Celsius and 85% humidity.

5. In summary, with the exception of excessive physical stress, the chip is resistant to conditions far in excess of those it is likely to encounter in use and is significantly more robust than existing plastic cards with magnetic strips, such as credit cards or magnetic stored value cards.

Hong Kong Monetary Authority
December 1996

Last Updated on 15 December 1998