HKSAR v. ZHENG JUNCAN AND OTHERS

DCCC 695/2025

[2026] HKDC 693

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 695 OF 2025

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REASONS FOR SENTENCE

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1.  Each of the 3^rd, 4^th and 7^th defendant (“D3”, “D4” and “D7”) were charged with 1 count of dealing with property known or believed to represent proceeds of an indicatable offence (Charges 10, 11 and 8 respectively), commonly known as money laundering. D4 was also charged with 1 count of managing a gambling establishment (Charge 16).

2.  D3, D4 and D7 pleaded guilty to the charges.

FACTS OF THE CASE

3.  On 28 June 2024, the police raided a gambling establishment (“Flat 4B”) and found that 2 telephone numbers (“T1” and “T2”) were the FPS accounts used to collect money from the gamblers. FPS check on T1 and T2 revealed that they were linked to a ZA Bank account owned by D3 (“ZA Account”) and a Tap & Go account owned by D4 (“Tap & Go Account”) respectively.

4.  On 18 July 2024, the police raided Flat 4B again and a total of 11 persons, including D4, were found. There were 5 fish-hitting machines and one plane-hitting machine inside Flat 4B. Game point cards and suspected accounting records were seized.

5.  On the same day, the police also raided another 5 gambling establishments and found that a Mr. Li related to some of those gambling establishments. Mr. Li was then arrested at his residence. Upon search, police found an ATM card of a Bank of China account (“Mr. Li’s BOC Account”).

6.  Later on, a search was conducted on one of the said gambling establishments and a notebook was found. Among the bank accounts set out in the notebook were the ZA Bank account, Tap & Go account, and a Ping An Bank account (“Ping On Account”).

7.  ZA Account was opened by D3 on 24 May 2023 with D3 being the sole account holder. Between 24 May 2023 and 28 July 2024 when the account was closed, 6,658 deposits totaling HK$2,597,214.27 were made to the ZA Account, while 211 withdrawals totaling HK$2,597,214.27 were made therefrom. The majority of the deposits were made via FPS (92.57%), while all except one withdrawal were made via mobile transfer. It was observed that 749 counterparties made deposits mostly in small amount (e.g. several hundreds) to the ZA Account throughout the period and withdrawals in larger sums were made to 99 counterparties. The overnight balance of the ZA Account ranged from HK$0 to over HK$192,000. HK$477,132.82 was transferred to Mr. Li’s BOC Account.

8.  Tap & Go Account was opened by D4 on 16 January 2024 with D4 being the sole account holder, and it was last active on 18 July 2024. Between 19 January 2024 and 18 July 2024, 2,284 deposits totaling HK$1,001,815.01 were made to the Tap & Go Account, while 42 withdrawals totaling HK$941,510 were made therefrom. It was observed that 332 counterparties made deposits mostly in small amount (e.g. several hundreds) to the Tap & Go Account throughout the period via transfer or PayBuddy and withdrawals in larger sums were made to 21 counterparties via transfer. HK$396,890 was transferred to Mr. Li’s BOC Account.

9.  Ping An Bank account was opened by D7 on 28 February 2023 with D7 being the sole account holder, and it was closed on 12 July 2024. Between 11 March 2023 and 12 July 2024, 4,531 deposits totaling HK$1,731,939.41 were made to the Ping An Account, while 76 withdrawals totaling HK$1,731,942.83 were made therefrom. The majority of the deposits were made via FPS (98%), while the majority of the withdrawals were also made via FPS (99.63%). It was observed that 463 counterparties made deposits mostly in small amount (e.g. several hundreds to tens of thousands) to the Ping An Account throughout the period and withdrawals were made from the account to 9 counterparties in larger sums. As of 12 July 2024, there was no balance in the account. HK$1,617,990 was transferred to Mr. Li’s BOC Account.

10.  On 18 July 2024, D3 was arrested for “money laundering”. Under caution, he admitted that he had given the ZA Account to another person.

11.  On 18 July 2024, during the police raid at Flat 4B, D4 was arrested for “assisting in the management of a gambling establishment”. Under caution, D4 admitted that he was paid HK$1,000 per day to manage the money of the premises and he worked from 8 am to 8 pm. D4 was also arrested for “money laundering”. Under caution, D4 said that the Tap & Go Account was used by another person and D4 to collect money from the gamblers.

12.  On 23 September 2024, D7 was arrested for “money laundering”. Under caution, D7 said that she owed Mr. Li money and was asked to open an account for him to use so as to offset the debt.

13.  According to the tax record, D3 earned HK$136,267 for the financial year of 2023/24. There was no tax record of D4 filed with the Inland Revenue Department for the financial year from 2018/19 to 2023/24. There was no tax record of D7 filed with the Inland Revenue Department for the financial year 2023/24.

Background of D3

14.  D3 is 43 years old now. He is living with his mother (65 years old), wife (42 years old), his son (19 years old) and his daughter (17 years old). His son and daughter are now studying in secondary school. D3’s wife has been disabled and unemployed since 2014 because 4 of her fingers on her left hand were cut in an industrial accident.

15.  D3 is a construction worker earning about HK$35,000 per month. He would contribute HK$30,000 to his family.

16.  D3 has 1 previous criminal record which is not similar to the present offence.

Background of D4

17.  D4 is 50 years old now. He is married and living with his wife (47 years old), his son (21 years old) and 2 daughters (18 and 6 years old respectively). His son is now a chef and his elder daughter is a cashier. His younger daughter is now studying in primary school.

18.  D4 is a waiter earning about HK$20,000 per month. He would contribute about HK$15,000 to his family. D4 has been suffering from diabetes and his wife has sustained mental illness for more than 10 years. D4’s son has been found to have suffered from serious hearing loss and hearing impairment.

19.  Moreover, D4 has to take care of his aged parents (78 and 88 years old respectively), who are having prolonged disease.

20.  D4 has 5 previous criminal conviction records and 4 of them relates to gambling in a gambling establishment.

Background of D7

21.  D7 is now 46 years old. She was born in China and settled in Hong Kong in 1991. Her husband is a manager earning between HK$25,000 to HK$36,000 per month, dependent on commission. They have a son (12 years old), who is attending a special school, and a daughter (13 years old). Her family is living with her parents-in-law in Mongkok.

22.  Between June 2023 and March 2024, D7 was unemployed. In April 2023, D7 worked as a cleaner, earning roughly HK$10,000 per month.

23.  D7 has 5 previous conviction records, but none of them are similar to the present charge.

MITIGATION

24.  Mr. Ma, counsel for D3 and D4, submitted that both D3 and D4 were never been rich and in order to support their family expenses, they stupidly decided to listen to their friend’s advice and opened a bank account and gave it to other person.

25.  Regarding D3, he did not really know how the other person would use his bank account.

26.  Regarding D4, he further worked in the gambling establishment to manage the money of the premises.

27.  Mr. Ma emphasized the remorseful attitude of both D3 and D4 and their determination of not to re-offend in the future. D3 and D4 were very cooperative with the police’s investigation and were not the mastermind of the whole crime. D3 only had little or even no knowledge about how his account would be used.

28.  Mr. Ma referred me to a number of authorities stating the sentencing principles for money laundering. He quoted the basic principle set out by the Court of Appeal in HKSAR v Hsu Yu Yi [1] 

“(1) It is the amount of money involved that is a major consideration and not the amount of benefit received by a defendant in the transaction.

(2) The culpability of the offence lies in the assistance, support and encouragement offered to the commission of an indictable offence. So a defendant’s level of participation and the number of occasions on which he is involved in the ‘money laundering’ activities are relevant factors to be considered.

(3) The offence of dealing with the proceeds from an indictable offence does not necessarily have any direct correlation with the indictable offence in question. However if the relevant indictable offence can be identified, the court may take into account the sentence imposed on the indictable offence pre se when determining the sentence of the dealing offence.

(4) If the case has an international element involving activities carried out across different regions, the court may impose a more severe sentence. This is to protect Hong Kong’s reputation as an international finance and banking hub from being tarnished.

(5) The length of time the offence lasted.”

29.  Another case cited by Mr. Ma is SJ v Wan Kwok Keung[2] in which the Court of Appeal held that money laundering is a serious offence and the sentencing starting point is 3 years or so where the “black money” involved is between 1 to 2 million.

30.  Also, Mr. Ma cited 律政司司長對谢志建[3] in which the Court of Appeal further held that Wan Kwok Keung merely summarized the approximate sentencing ranges corresponding to the amounts in the cases listed by Hsu Yu Yi. So, both Wan Kwok Keung and Hsu Yu Yi are not sentencing tariff.

31.  For the offence concerning gambling establishment, Mr. Ma referred me to HKSAR v Chiu Hoi Po[4]  and 香港特別行政區訴玉炳健[5]and submitted that a few weeks imprisonment would be appropriate in view of the fact that D4 was only charged to have managed the establishment for 1 day and there were only 6 machines found in the premises.

32.  Finally, Mr. Ma asked me to impose a concurrent sentence for the 2 offences faced by D4.

33.  Mr. Boyton, counsel for D7, submitted that D7 owed money to the 1^st defendant (“D1”) at the fish hitting centre. In the circumstance, D1 asked D7 to open a bank account to offset a HK$3,000 debt for which D7 agreed. As D7 had lost through gambling and her debt at the time of arrest was roughly HK$20,000 to HK$30,000.

34.  Mr. Boyton emphasized that D7 had the smallest role in the entire syndicate and referred me to almost the same authorities cited by Mr. Ma.

35.  Besides, Mr. Boyton submitted that taking into account the background of this case, D7 would probably know (instead of having reasonable grounds to believe) that the funds came from illegal gambling and has no international dimension involved.

36.  Mr. Boyton agreed that this kind of offence attract immediate custodial sentences.[6] 

37.  Mr. Boyton cited HKSAR v Boma, another well-known judgment by the Court of Appeal, in which the “significant features” to be considered in relation to sentencing for money laundering includes: -

(1) The nature and penalty of the predicate offence;

(2) The nature of knowledge or belief of the predicate offence on the part of the money launder;

(3) The international element;

(4) The sophistication of the offence;

(5) The instance of a criminal syndicate;

(6) The number of transactions and the length of time in the money laundering process;

(7) Subsequent knowledge of the predicate offence; and

(8) The role and acts of the offender and the money launderer, including his position and reward.

38.  Mr. Boyton pointed out that the present case was not a telephone deception case which is more serious and submitted that in SJ v Siu Yun Yee [2017] 3 HKLRD 678, it was held that proceeds come from illegal gambling tends to make it less serious than other crimes.

39.  Mr. Boyton submitted that the predicate offence was the operating of an unlawful gambling establishment. The criminal syndicate was fairly organized, but the role of D7 was limited to a single act of passing her bank details over to another person. D7 may not have known the full extent of the operation. The amount involved was about HK$1.7 million, over a period of 16 months. In that circumstance, Mr. Boyton submitted that a starting point should be substantially lower than 3 years.

OSCO APPLICATION

40.  Pursuant to section 27(2) of the Organized and Serious Crimes Ordinance (Cap 455) (“OSCO”), the prosecution applied for an enhancement of sentence in relation to the money laundering charges (i.e., Charges 10, 11 and 8) on the basis of prevalence of using stooge account as well as the nature and extent of harm caused to the community. In support of the application, the prosecution submitted a witness statement made by Chief Inspector Li Yiu Nam dated 9 April 2026 in which the statistics concerning “stooge account” was provided.

41.  Mr. Ma did not object to the application but opined that an enhancement of 20% would be sufficient.

42.  Mr. Boyton objected to the Prosecution’s application and submitted that in the present case,

(1) there are no “overseas victims”;

(2) the prosecution’s data is based mainly on fraud, deception and scams, but not victims in gambling related offence;

(3) the reference to the increase in the deception cases are irrelevant and figure for the stooge accounts between 2024 and 2025 is falling;

(4) the modus operandi outlined in the witness statement is not applicable to D7;

(5) there is no evidence that D7 knew that her account would be used for any sort of scam; and

(6) the monetary losses reported by victims in deception cases is irrelevant.

43.  In support of his objection, Mr. Boyton referred me to HKSAR v Fong Chi Yam ([2020] 2 HJKLRD 700), a case in relation to phone deception. Mr. Boyton submitted that the Court of Appeal had quashed the lower court’s order to enhance the sentence and the ratio dicta are:

“105. Although “telephone deception” cases are extremely prevalent, there is no evidence to show the applicant knew that the amount involved in the two charges originated from the telephone deception cases. There is no direct relation between the culpability of the applicant and the telephone deception offences. Telephone deception offences are serious as well as prevalent. The court has a duty to deter them. However, the court should not impose additional punishment on an applicant for offences which he neither had knowledge of nor had taken part in.”

44.  Mr. Boyton pointed out that the prosecution could not prove D7’s knowledge and the statistics provided were irrelevant and therefore not an appropriate case to enhance the sentence.

SENTENCE

Charges 10, 11 and 8 (money laundering)

45.  I have taken into account all the authorities cited by counsels for the defendants. I also bear in mind all the submission made on behalf of the defendants.

46.  Money Laundering is a very serious offence as it is an attempt to legitimize proceeds from criminal activities: HKSAR v Kamran[7]. Under Section 25 of OSCO, this offence is punishable on indictment with a fine of HK$5,000,000 and imprisonment for 14 years.  There are no sentencing guidelines or tariffs.  Each case depends on its own facts.

47.  In any event, deterrence is paramount: HKSAR v Ng Man Yee[8]. Subject to exceptional circumstances, immediate imprisonment is appropriate even for a first offender: Secretary for Justice v Siu Yun Yee[9].

48.  Also,the Court of Appeal in a recent judgment reminds that in sentencing for this kind of offence, the sentencing judge should bear in mind “the overall “impression” of the case”[10] .

49.  Judging from the overall background of this case and most of the deposits were in small amount, I accept that the “black money” passed through the bank accounts of the defendants were derived from illegal gambling.

50.  In respect of Charge 10 faced by D3, the black money involved was about HK$2.5 million and lasted for about 1 year and 2 months.

51.  In respect of Charge 11 faced by D4, the black money involved was about HK$1 million and lasted for about 6 months.

52.  In respect of Charge 8 faced by D7, the black money involved was about HK$1.7 million and lasted for about 1 year and 5 months.

53.  In other words, Charge 10 is most serious in term of the amount of the black money involved. However, charge 8 lasted for the longest period of time.

54.  In Secretary for Justice v Ngai FungSin Apple[11], Yeung VP said:

“Generally speaking, the sentence passed in a “money laundering” case is primarily to reflect the amount of the “illicit/black money” involved. Neither the fact that the “illicit/black money” was actually not derived from an indictable offence nor the defendant’s ignorance of the actual source of the “illicit/black money” is necessarily a valid mitigating factor. On the other hand, if there is evidence which can prove from what serious crime the “illicit/black money” was derived and if the defendant was aware of the origin of the “illicit/black money”, that would be an aggravating factor” (emphasize added)

55.  Knowledge of the predicate offence is one of the considerations for sentence and I accept that D3 and D7 did not possess actual knowledge of the predicate offence. D4, instead, had actual knowledge that his account would be used for collection of “black money” derived from illegal gambling.

56.  In my view, the culpability of D3, D4 and D7 are almost the same. Their roles were to sell or lend their bank accounts to others.

57.  I accept that there was no international element involved in this case and all the “black money” were derived from illegal gambling.

58.  Taking all the circumstance into account, the starting point for each of Charges 10, 11 and 8 should be 24 months’ imprisonment.

59.  I do not accept that the personal background of each of D3, D4 and D7 warrant any reduction of sentence.

60.  In light of the guilty plea, which is the only mitigating factor in this case, the sentence for each of Charges 10, 11 and 8 is reduced to 16 months’ imprisonment.

OSCO APPLICATION

61.  The consideration for whether or not to enhance a sentence under the OSCO are “the prevalence of the specified offence and the nature and extent of any harm, whether direct or indirect, caused to the community by recent occurrences of the specified offence”.

62.  In the present case, the OSCO application was made on the basis of the prevalence of the use of stooge accounts in money laundering offences and the nature and extent of harm caused to the community by their recent occurrence. There is no requirement that the stooge accounts must be used for handling “black money” derived from fraud or deception.

63.  The offence is money laundering, not money laundering relating to illegal gambling.

64.  In a gist, the witness statement of Chief Inspector Li particularized the total number of deception cases and money laundering cases, with total number of stooges arrested (Table A) and also the amount of reported losses and/or proceeds laundered, with amount and number of stooge accounts involved (Table B) from 2020 to February 2026.

65.  Stooge account holders are those who did not participate in the predicate offence and often did not even know and/or just had limited knowledge of the predicate offence. Obviously, the prime culpability relates to lending or selling their bank accounts to others and/or allowing others to use their bank accounts.

66.  I do not intend to repeat in great details of all the figures referred to in the witness of Chief Inspector Li. I just highlight a few of the figures-

(1) The total number of deception cases and money laundering cases increase from about 16,000 in 2020 to over 47,000 in 2025. During that period of time, the total number of stooges arrested increase from 760 (31% of the total arrested person) in 2020 to over 7,800 (75% of the total arrested person) in 2024 and then dropped to about 5,300 in 2025(71% of the arrested person).

(2) The total amount of the reported loss due to deception and money laundering cases was about HK$3,000 million in 2020 and increased to over HK$36,600 million in 2022. Since then, it dropped. In 2025, the total loss was still about HK$7,600 million. During that period of time, those loss involving the use of stooge account increase from HK$1,800 million in 2020 to over HK$36,000 million in 2022. Since then, it dropped. In 2025, the loss was about HK$3,900 million. During that period of time, cases involving the use of stooge account was 845(62%) in 2020, and then increase to 3,970(82%) in 2023. In 2024, it was about 3,675 (75%) and in 2025, it was about 3,100 (51%).

67.  Despite the downward trend recently, from the figures, I accept that money laundering is still a prevalent offence. Also, I accept that it still causes serious harm to the community.

68.  I do not accept the submission of Mr. Boyton. Although the figure provided by the prosecution was mainly related to money laundering with black money derived from fraud, that figure is sufficient to prove whether money laundering is a prevalent offence or not. There is no need to provide figures specifically involving money laundering with black money derived from illegal gambling.

69.  The ratio dicta in Fong Chi Yam cited by My Boyton should be not construed out of the context. The facts of Fong Chi Yam were that the appellant had admitted receiving and dealing with a sum of money. The only issue of trial was whether the appellant had reasonable grounds to believe that the sums were proceeds of an indictable offence. The appellant even admitted he felt suspicious about the transactions, but adopted an indifferent attitude for the sake of his business. In other words, the appellant in that case was not a stooge account. The basis of the OSCO application in that case was also not relating to stooge account. The Court of Appeal also pointed out that the appellant received only 2 sums of money from unknown sources. It was on that factual background the Court of Appeal said that there was no direct connection between the appellant’s culpability and the telephone deception and decided not to enhance the sentence.

70.  Suffice it to say, the facts of Fong Chi Yam case are different from the present case.

71.  In fact, to allow an enhancement of sentence pursuant to OSCO for offence of money laundering relating to the black money derived from illegal gambling is nothing new. A recent decision can be found in the District Court[12] .

72.  I accept that the prosecution has proved beyond reasonable doubt for the enhancement under OSCO. Taking into account of all the information as stated in the witness statement by Chief Inspector Li, including the downward trend, I opine a 20% enhancement would be appropriate.

73.  In the circumstance, for charge 10, D3 is sentenced to 19 months’ imprisonment. Likewise, D4 is sentence to 19 months’ imprisonment for charge 11. D7 is sentence to 19 months’ imprisonment for charge 8.

Charge 16 (Managing gambling establishment)

74.  For Charge 16, having considered the submission by Mr. Ma, I accept that the scale of the gambling establishment is not large. I adopt 1.5 months’ imprisonment as the starting point and reduce to 1 month’s imprisonment upon the guilty plea.

75.  In the circumstance, D4 is sentenced to 1 month’s imprisonment for Charge 16.

76.  Taking into account the totality principle, the sentence for Charges 11 and 16 are to be run concurrently.