Crowdfund office proposed to boost transparency

Jane Cheung

A designated office should be established to deal with crowdfunding activities, authorities have proposed, as it launched a three-month public consultation on the issue yesterday.

The proposal sets out suggestions on enhancing the transparency and accountability of crowdfunding activities, which include requiring in-principle future crowdfunding activities to apply to authorities and obtain permissions.

"A crowdfunding affairs office has been proposed to process regulatory and administrative matters related to crowdfunding activities," a spokesman for the Financial Services and the Treasury Bureau said.

All public fundraising activities targeting local individuals and entities are required to apply in advance to the proposed office.

When processing applications, the office will consider several factors including the reputation of the applicant, proportionality of the purpose to the scale, as well as risks brought about to public interests and safety, the spokesman said.

The office will coordinate with relevant government departments to fuse procedures with existing regulations. The spokesman added: "Fundraisers are required to disclose the objectives and arrangements of their activities, use local bank accounts and keep proper records of fund movements."

The bureau has also proposed exemption and facilitation measures to speed up the commencement of fundraisers that are widely recognized to address urgent needs.

Existing commercial fundraising activities - which are "already well regulated" - will not be affected.

Authorities have also proposed empowering law enforcement agencies to cease unlawful crowdfunding activities and prosecute offenders.

Under the Organized and Serious Crimes Ordinance, a person who deals with property known or believed to represent proceeds of indictable offense are subject to a maximum sentence of 14 years in jail and a HK$5 million fine on conviction upon indictment.

Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said Hong Kong lacks clear regulations over online crowdfunding activities.

"In the past people have fraudulently earned profits in the name of crowdfunding," he wrote. "Organizations have also used it to support behavior jeopardizing public and national safety."

Hui cited the defunct protester-supporting 612 Humanitarian Relief Fund as an example and said after it was charged as an unregistered society, the Alliance for True Democracy, whose bank account was used by the relief fund, subsequently ceased operation.

On November 25, the fund's six trustees and secretary, including Cardinal Joseph Zen Ze-kiun, 90, were convicted for failing to register the fund as a society and were each fined up to HK$4,000.

jane.cheung@singtaonewscorp.com