2. OSCO was enacted on 21 October 1994 to enhance our law enforcement capabilities in tackling organized and serious crimes, including triad and money laundering offences. It came into full effect on 28 April 1995. It empowers our law enforcement agencies to tackle organized and serious crimes through:

special investigative powers;
confiscation of crime proceeds;
criminalization of money laundering activities, and
enhanced sentencing powers.

Special Investigative Powers

3. In view of the difficulties encountered by law enforcement agencies in breaking the wall of silence protecting those who coordinate and mastermind organized criminal syndicates, special investigative powers are introduced under section 3, where the Attorney General may make an ex parte application to the High Court for an order (witness order) to require a person having information relevant to an investigation to answer questions and furnish material. A person is not excused from complying with such an order on the ground that to do so might tend to incriminate him or would breach an obligation as to secrecy. However, information so obtained cannot be used as evidence in criminal proceedings against him.

4. Under section 4, the Attorney General or an "authorized officer" may make an ex parte application to the High Court for an order (production order) to produce material, including any books, document or other record in any form, which are relevant to the investigation of a case within a time limit set by the court. The officer can examine and make copies of such material.

5. Under section 5, an "authorized officer" may apply to the High Court or District Court for a search warrant to permit investigators to enter and search premises, to seize and retain any material likely to be relevant to the investigation for which the warrant was issued.

Confiscation of Crime Proceeds and Money Laundering

6. In order to target at the financial bases of organized crime groups, section 8 empowers judges in the High Court or District Court, upon the application of the prosecution, to make a confiscation order in sentencing an accused for offences relating to OSCO, if the proceeds of the offences are at least $100,000 in total. Moreover, the High Court may issue a restraint order under section 15 to prohibit any person from dealing with any realisable property, subject to such conditions and exceptions as specified in the order.

7. Another measure targeted at crime proceeds is the creation of a money laundering offence under section 25 to criminalize persons dealing with any property, knowing or having reasonable grounds to believe that the property in whole or in part directly or indirectly represents any persons proceeds of an indictable offence.

Enhanced Sentencing

8. In the past, the prosecution was unable, without the invitation of the court, to bring to the attention of the court relevant information relating to the prevalence of the offence, its financial rewards, its impact on the community or victims, or whether it is related to organized crime or triad activity. This limitation had restricted the courts ability to impose heavier sentences where appropriate. Under section 27 of OSCO, the District Court or the High Court may pass an enhanced sentence (subject to the statutory maximum penalty for that offence) having regard to the information provided by the prosecution on the seriousness and prevalence of the offence.

Safeguards

9. In view of the compelling nature of the powers under section 3 requiring persons to answer questions and produce materials, a number of important safeguards are built into the Ordinance -

the powers can only be invoked in respect of organized crimes, involving the restricted list of offences in Schedule 1 to the Ordinance;
applications to use such powers must be made by the Attorney General; such powers must be authorized by a High Court Judge who must be satisfied that a number of stringent conditions have been met. Details of these requirements are set out in the Rules of Supreme Court Order 116;
a Code of Practice was formulated under section 3(19) setting out the procedures for the questioning of persons and production of material as well as complaints channels; and
the Police Central Witness Protection Unit was set up in April 1995 to enhance the Police witness protection capability.

Implementation

10. In exercising the special investigative powers "authorized officers" have been prudent and restrained. They have fully complied with the Rules of Court and Code of Practice. Each application to invoke the powers is decided by weighing carefully all surrounding factors and judging them in the light of the Attorney Generals guidance.

11. Almost all the provisions under OSCO have been invoked by the Police in the investigation of organized or triad related crimes, as well as the Customs and Excise Department (C&ED) in the investigation of smuggling offences. Brief descriptions and statistics on the application of various provisions as at 31 March 1997 are at Annex A.

12. The provisions under sections 25A of OSCO and Drug Trafficking (Recovery of Proceeds) Ordinance (DTRPO) requiring any person to report suspicious transactions involving money laundering have been publicized through letters issued by the Attorney General and the Police to financial and other relevant institutions. This legal requirement has prompted the banks to make many more disclosures of suspicious transactions to the Joint Financial Investigation Unit, which is the central unit to receive and investigate reports on suspicious financial transactions The number of such reports has increased significantly from 550 in 1994 to 1,798 in 1995, with a further increase to 4,140 in 1996

Areas of Improvement

Powers of Search

13. In the light of implementation experience, we have reviewed whether the powers of search under section 5 of OSCO and section 21 of DTRPO should continue to be exempted from the new provisions governing the powers of entry and search of journalistic materials in the Interpretation and General Clauses (Amendment) Ordinance 1995, which came into effect on 1 August 1996. The basis for this exemption is that the search and seizure powers in the two Ordinances are governed by stringent criteria which, although different from those in the Interpretation and General Clauses (Amendment) Ordinance, should provide adequate protection to journalistic material.

14. The exempted provisions in OSCO and DTRPO have never been exercised in relation to journalistic materials. This is not surprising given the stringent criteria governing the exercise of the powers under those provisions. It is, however, premature to conclude whether the exemption should continue or not based on 8 months operational experience. Given the ever-changing mode of operation by criminal elements, we do not preclude the need to invoke such powers in future. We therefore consider that the present exemption should be maintained, but the situation should be regularly reviewed.

Witness Protection

15. The Police need cooperation and support from members of the public in combating triad activities, especially to come forward as witnesses. Having set up the Police Central Witness Protection Unit in 1995, we introduced the Witness Protection Bill into this Council in July 1996 to further enhance the effectiveness of the existing witness protection measures, and to establish a system for the change of identity of high-risk witnesses. If enacted, we believe that this will further encourage members of the public to come forward to give evidence, particularly in triad related cases.

International Cooperation

16. Concerns about the escalation of transnational crime and the need for greater international cooperation to combat serious crime have resulted in a movement towards the establishment of mutual legal assistance in criminal matters arrangements. With the agreement of the Chinese side in the Joint Liaison Group, we are also establishing a network of bilateral agreements on mutual legal assistance in criminal matters which will remain in force beyond 30 June 1997. So far, we have signed agreements with Australia and the Untied States. These agreements will enhance our cooperation with third countries in the investigation and prosecution of criminal offences, including proceedings relating to confiscating the proceeds of crime. The Mutual Legal Assistance in Criminal Matters Bill introduced into this Council on 23 April 1997 will provide the appropriate legal framework to implement these agreements.

Conclusion

17. To conclude, OSCO is proving to be a useful tool in the fight against triads and organized crime. The powers given to the law enforcement agencies and the prosecuting authorities have greatly assisted in the fight against organized crime with encouraging results. So far, the Police have made 24 applications for enhanced sentencing and were successful in 11 of them involving 19 people. The enhanced sentences ranged from an increase of one-third to two-thirds of the usual sentence. The money laundering offence provisions have enhanced our capability in the fight against money laundering, thereby dealing a heavy blow on the triads by targetting at their financial base. By the end of December 1996, the total amount of crime proceeds confiscated is about $5.9 million.

18. Moreover, the invocation of OSCO powers have assisted in the smashing of nine of the territorys largest loansharking syndicates. OSCO provisions have also been successfully used in ten smuggling and theft of vehicles cases, one blackmail, one deception and one bookmaking case. With the full implementation of OSCO and other anti-triad measures, the ratio of triad involvement in overall crimes in the past three years has remained relatively stable at less than 5%. In 1996, the number of triad-related crimes, including blackmail, intimidation, wounding and serious assault and unlawful societies offences dropped by 21% when compared with 1995.

19. Meanwhile, law enforcement agencies have complied strictly with the codes of practice, guidelines and rules in exercising the powers under OSCO. No complaints about any breaches or abuse of powers under OSCO have been received. The law enforcement agencies, the Legal Department and the Judiciary will continue to build up their experience through effective training and close liaison for better implementation of the Ordinance. The Administration will continue to review relevant legislation to ensure that they meet up to social expectations, operational needs and international trends.

Security Branch
5 May 1997

[#1C/2LOS12-5]

Annex A

Application of OSCO

(as at 31 March 1997)

Statistics

Provisions in OSCO	Applications by Police			Applications by C&ED
Witness Orders (S.3)		4		0
Production Orders (S.4)		30		25
Search Warrants (S.5)		3		6
Confiscation Orders (S.8)		1		0
Restraint Orders (S.15)		8		1
Charging Orders (S.16)		0		0
Money laundering offences (S.25)	8 cases			0
	Convicted 6 cases (10 persons)	Acquitted 2 cases** (3 persons)	Pending Nil
Special Sentencing Procedure (S.27)	24 applications			0
	Successful 11 cases (19 persons)	Unsuccessful 11 cases (29 persons)	Withdrawn 2 cases* (3 persons)

* Two applications for enhanced sentences were withdrawn by the prosecuting counsel after considering the information available was insufficient to prove the prevalence of the offences.

** The charge of one case which involved one defendant was amended to Conspiracy to defraud during pre-trial review and the defendant was acquitted of that charge after trial.

	Police	C&ED
	Accumulated Amount (HK$ million)	Accumulated Amount (HK$ million)
Value of assets restrained	7.7	16.9
	Loansharking (2 cases) 2.9 Conspiracy to defraud (1 case) 2.1 Deception (1 case) 2.7	Smuggling 16.9 (1 case)
Amount ordered to be confiscated	5.9	0
Amount recovered & paid to the Government	Nil	Nil
Imprisonment term in default of payment	Nil	Nil

Section 3 - Witness Order

The Police have successfully applied for four Witness Orders for the investigation of a murder and robbery case, a loanshark case, and the arson and murder case at the Top One Karaoke where two Witness Orders were served. On three occasions, useful information had been obtained which greatly assisted the investigation. Legal advice is being sought on the one occasion where the person concerned refused to cooperate.

Section 4 - Production Order

A total of 55 Production Orders have been issued for the investigation of 8 cases including two triad extortions, three vice cases, one loanshark, one conspiracy to defraud, and one smuggling case.

Section 5 - Search Warrant

Three search warrants have been issued to the Police in connection with one vice case and two loanshark cases, where assets representing proceeds derived from the criminal activities were uncovered. A total of six search warrants have been issued to the C&ED in connection with a vehicle smuggling case.

Section 8 - Confiscation Order

The first successful confiscation order for HK$ 5,866,300 was issued by the District Court in November 1996 in a case where the accused was charged for obtaining property by deception.

Section 15 - Restraint Order

Nine restraint orders have been obtained in relation to three deceptions, two triad-related extortions, two loanshark cases, one vice case, and one smuggling case. About HKD25 million in assets belonging to the arrested persons have been restrained.

Section 25 - Money Laundering

Thirteen persons related to eight separate cases have been charged with money laundering offences. All cases involved the opening of bank accounts by frontmen for use in various crimes such as loanshark, extortion, deception and bookmaking. All cases have been concluded with ten convictions resulting.

There have been no prosecutions under the new S25A, (which was brought into force in September 1995) requiring a person with knowledge or suspicion that property representing the proceeds of an indictable offence to report to the authority.

Section 27 - Enhanced Sentencing

The Police have made 24 such applications and were successful in 11. The total number of people involved in these 11 cases was 19. The usual enhanced sentence ranges from an increase of one-third to two-thirds of the usual sentence.

[#1C/ANNEXA]

Last Updated on 21 August 1998