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Following is a question by the Hon Ng Leung-sing and a reply by the Secretary for Security, Mr Ambrose S K Lee, in the Legislative Council today (May 5):

Question:

Recently, there has been a spate of cases of criminal elements seeking to defraud by faking the websites set up or electronic mails sent by some local banks or financial institutions. In this connection, will the Government inform this Council of:

(a) the number of such cases known by the authorities in each quarter of the past two years, as well as the number of those cases in which members of the public were defrauded and the amount of money involved;

(b) the results of the enforcement actions taken by the Hong Kong authorities and the relevant authorities in other jurisdictions against such cases; and

(c) the practical and legal difficulties in preventing and punishing such crimes at present, the cooperative efforts made in this regard by the Hong Kong authorities and the enforcement agencies and financial regulatory authorities in other jurisdictions, as well as the areas for improvement in relation to such efforts?

Reply:

Madam President,

(a) According to Police statistics, the number of cases involving fake websites imitating those of local banks and other financial institutions is nine in 2003, and 12 in the first three months of this year. There are no reports of any person in Hong Kong being defrauded.

In 2003, the Police received five reports on fake electronic mails of banks. From January to March this year, there were 110 such cases. There are no reports of monetary losses in these cases.

(b) On receiving reports of fake websites or electronic mails, the Police will investigate their sources. To date, all the web servers concerned are located outside Hong Kong. The Police and the relevant regulatory authorities will inform the law enforcement agencies and regulatory institutions of the jurisdictions concerned, with a view to shutting down such websites as soon as possible and investigating the cases. The jurisdictions concerned will keep Hong Kong informed of their enforcement actions. According to the Police, among the fake websites reported in 2003, eight have been shut down. Among those found this year, seven have been shut down.

(c) Criminals can conceal their genuine identities easily on the Internet. Coupled with the cross-border and loose regulation of the Internet, the Police have some difficulty in investigation into and collection of evidence in Internet crimes.

At present, the Police maintain close liaison and exchange intelligence with the Hong Kong Monetary Authority (HKMA), the Hong Kong Association of Banks, the Securities and Futures Commission (SFC), and enforcement agencies overseas and in the Mainland, in order to combat jointly the use of fake websites and electronic mails imitating those of local banks and other financial institutions by criminals for attempted fraud. Such actions include shutting down fraudulent websites.

Besides, the HKMA is a member of the Electronic Banking Group of the Basel Committee. The Group has begun discussion on fraudulent websites since 2002, and has established a contact list to expedite communication among Group members.

The SFC follows closely the discussions in the International Organization of Securities Commissions and, together with other regulators, addresses the issue of dealing with fake websites of financial institutions.

Ends/Wednesday, May 5, 2004

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