HKSAR v. DENG ZHIQING

DCCC 138/2020

[2020] HKDC545

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 138 OF 2020

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REASONS FOR SENTENCE

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1.  The defendant pleaded guilty to one charge of dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap. 455, commonly known as “money laundering” offence.

Admitted Facts

2.  The victim company was a metal waste company in the Netherlands. In July 2018, the victim company received a request from an unknown person impersonating its German parent company.

3.  During the period from the 17to 24July 2018, on 11 occasions, the victim company remitted a total of HKD 99.8 million to seven bank accounts held by seven Hong Kong companies.  Thereafter, from the 20 to 26July 2018, the aforesaid crime proceeds were transferred from the accounts of the above seven companies to the accounts of nine other Hong Kong companies.

4.  The Defendant was the sole director-cum-shareholder of one of the aforesaid seven companies, namely Guangji Trade Limited (“the Company”).  He was also the sole account signatory of the bank account of the Company, a Hang Seng Band Limited integrated account numbered 370-366916-813 (“the Account”).

5.  The Account was opened on 2 May, 2018.  It was provided in the opening mandate that the Company engaged in trading of tools, hardware, fittings and fixtures with annual turnover of HK$10 million and the main business was in Spain and Australia. 

6.  During the period from the 18to 27 July 2018, the Account has the following activities:-

	Deposits		Withdrawals
Currency	Total Amount	No. of Trans.	Total Amount	No. of Trans.
USD	USD 2,515,591.09 (i.e. HKD 19,621,610.50)	11	USD 2,508,908.78 (i.e. HKD 19,569,488.48)	18
AUD	AUD 300,014.00 (i.e. HKD 1,620,075.60)	3	AUD 300,000.15 (i.e. HKD 1,620,000.81)	2
HKD	HKD 2,325,468.71	11	HKD 2,268,757.74	13
Total	HKD 23,567,154.80	25	HKD 23,458,247.03	33

7.  The Defendant’s Travel Index Check records showed that he came to Hong Kong on the 2 May 2018. He was arrested when he returned to Hong Kong on the 28May 2019.

Mitigation

8.  The defendant has a clear record and is aged 36 years old. He was born in the Hubei Province, mainland China. He got married in 2007 and divorced in 2015.  The Defendant has two daughters and one son from his aforesaid marriage. The Defendant now lives in Yueqing city, Wenzhou, Zhejiang Province.

9.  The defendant worked as a worker in a factory. His income was about RMB 4-5,000 per month during the off-season, and he could earn RMB 6,000 during the peak season. 

10.  The defendant was involved in the present offence, in about 2018, the Defendant met a person named 馬總 (“Ma”). Around May 2018, the Defendant was unemployed. As a result, Ma spent around RMB 4,000 inviting the Defendant to play in Hong Kong, and the Defendant was required to open the bank account of the present case with Hang Seng Bank. After opening the account, the Defendant gave the password related to the said account to Ma for his use.

11.  The Defendant’s only benefit in this case was the amount that Ma gave him for coming to Hong Kong to play, that is, about RMB 4,000. Other than that, the Defendant did not receive other benefits or advantages. 

12.  The involvement of the Defendant in this case is only confined to the said account. There is no evidence that he knew or participated in other matters in the case. In simple terms, his role is only a chess piece at the mercy of Ma.

13.  The Defendant feels remorseful and took the earliest opportunity to indicate his plea of guilty to the present offence.

Reasons for Sentence

14.  Money laundering is a very serious offence, for which a deterrent sentence is required.  There is no sentencing guideline for the money laundering offence.  A number of significant factors have been identified as relevant in considering the proper sentence, as stated in HKSAR v Hsu Yu Yi[1] and HKSAR v Boma[2].  In HKSAR v Boma, the Court of Appeal stated that in considering the sentence, the amount of money laundered is a significant factor. 

15.  The court should also take into account other features, including:-

(a) the nature of the predicate offence;

(b) the state of the offender’s knowledge;

(c) whether the operation involved an international dimension;

(d) the sophistication of the offence;

(e) whether committed by or on behalf of an organised criminal syndicate;

(f) whether there was one transaction or many, and the length of the time over which the offence was committed;

(g) whether the offender continued to launder funds after he had discovered the nature of the funds;

(h) the role of the offender and the acts performed by him.

16.  Regarding offender’s knowledge, Stock V-P said at paragraph 40(2)(a),

“But this is a question to be approached with considerable caution, since many offenders will assert ignorance of the origin of the proceeds in question, particularly where the offender has deliberately turned a blind eye thereby choosing not to know. In such a case it must be recognised that he is nonetheless “assisting in the original crime, whether with knowledge or blind eye knowledge of it”: R v Basra above.”

17.  In Secretary for Justice v Wan Kwok Keung[3] where Yeung JA (as he then was), in giving the judgment of the Court of Appeal, said at para 15,

“In HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, Cheung JA set out the amounts of money involved and the sentences passed in a number of “money laundering” cases. The sentencing starting point is 3 years or so where the “black money” involved is between $1 million and $2 million; 4 years or so where it is between $3 million and $6 million; and could be over 5 years where it is above $10 million.”

18.  In sentencing, I have considered the following: -

i) Defendant has a clear record;

ii) The amount of money involved is HK$2,325,468.71, US$2,515,591.09 and AUS$300,014.00, for a total of HK$23,567,154.80;

iii) The nature of the predicate offence is one of international fraud, impersonating the CEO of victim’s company in Germany to transfer funds elsewhere;

iv) There is no evidence to show the defendant was directly involved in the fraudulent scheme. However, by opening the account and turning over all the account information to Ma, the defendant has deliberately turned a blind eye thereby choosing not to know;

v) The defendant opened the Account with false pretence, stating in the opening mandate that the Account engaged in trading of tools, hardware, fittings and fixtures with annual turnover of HK$10 million and the main business was in Spain and Australia;

vi) Money was transferred from the Netherlands. Defendant came from mainland China to open the account. There was an international dimension in the operation;

vii) There were a total of 11 deposits and 18 withdrawals in US currency, 3 deposits and 2 withdrawals in AUD and 11 deposits and 13 withdrawals in HKD in the span of 10 days between 18 and 27July 2018; and

viii) The role of defendant is only confined to the Account itself. Defendant was paid a sum of RMB 4,000.

19.  Considered all the above, I adopt a starting point of 5 years.  I find there is nothing in the defendant’s mitigation that would warrant a discount in sentence that is not already subsumed in the discount be granted for his plea of guilty.  The defendant is granted the full one-third discount for his timely guilty plea, and is sentenced to 40 months’ imprisonment.  

[1] [2010] 2 HKLRD 545

[2] [2012] 2 HKLRD 33

[3][2012] 1 HKLRD 201