Security fears spark fundraising law push

A consultation will be conducted in the fourth quarter for the regulation of fundraising activities, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu told a Legislative Council meeting yesterday.

Hui said authorities are targeting the completion of a review by the third quarter of four types of fundraising activities, including those for political and charitable purposes.

He was replying to a question from Joephy Chan Wing-yan of the Federation of Trade Unions, who cited reports that online fundraisers had been organizing illegal activities that endangered national security.

Hui admitted that the SAR lacks relevant legislation or regulatory bodies to deal specifically with online crowdfunding activities, although certain laws such as the Organized and Serious Crimes, Theft, Securities and Futures and the Money Lenders ordinances are in place to check wrongdoing in fundraising.

He said authorities have been reviewing regulations to draw clearer regulatory requirements as well as strengthen the transparency and accountability of crowdfunding activities.

Four online fundraising types will fall under the authorities' scope of review.

The first two are equity crowdfunding, where investors provide capital for a project or business in exchange for income deriving from shares, as well as peer-to-peer lending, in which online platforms match lenders and borrowers then link them up for guarantee-free loans.

The other two are donations-based crowdfunding, where funds are raised for charitable or political activities, and reward-based ones where products or services are exchanged.

Hui said authorities currently do not have figures on online crowdfunding activities because applications are not required by the law.

Undersecretary for security Sonny Au Chi-kwong said three national security cases have stemmed from alleged online fundraising activities.

There were five other cases of money laundering, fraud or theft from suspected illegal activities supported by funds raised online.

Hui added that those arrested allegedly used the proceeds for personal consumption, investment, entertainment, or other uses instead of the proclaimed purposes.

He said some of them even allegedly posed as representatives of social welfare and education institutions.

Election Committee representative Alice Mak Mei-kuen urged Hui to speed up the process and offer a timetable on the legislation.