HKSAR v. MOK KA WING

DCCC 473/2024

[2024] HKDC 1915

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 473 OF 2024

________________________

________________________

________________________

REASONS FOR SENTENCE

________________________

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

Facts

2.  On 24 June 2022, the defendant in his sole name opened an account numbered 780381471888 with Hang Seng Bank Limited (the Account). Since its opening, except for deposits and withdrawals totalling HK$300, the Account had otherwise remained dormant up to 19 January 2023.

3.  Between 20 & 21 January 2023:

(i)

(a)  One deposit of US$150,068 was made into the Account. This deposit was converted to HK$1,173,471.73 by an intra-account foreign exchange conversion transfer (the converted amount)  on 20 January 2023;

(b)  38 Hong Kong Dollar deposits amounting to HK$2,559,585 (not including the converted amount)  were made into the Account; among these deposits was one made on 21 January 2023 of HK$400,000 which was the proceeds of a cryptocurrency investment fraud;

(ii)  A total of 34 withdrawals amounting to HK$3,732,908.01 were made from the Account;

(iii)  Most deposits and withdrawals were made by internet transfer, which involved numerous different counterparts. Multiple deposits were usually made on the same day, the funds accumulated were dissipated on the same day or shortly afterwards; and

(iv)  As of 21 January 2023, the Account’s closing balance was HK$148.72 with no further transactions thereafter.

4.  The Account was being used as a temporary repository of funds at all material times.

5.  The defendant was in Hong Kong at all material times. He did not file any salary tax returns with the Inland Revenue Department for the financial years 2021/22 and 2022/23.

6.  He was arrested on 27 December 2023.

Defendant’s Background

7.  He is 32 years old. He was born in Guangzhou and migrated to Hong Kong when he was 4 years old. He studied here up to Form One. After leaving school, the defendant worked as a delivery worker, mostly on a casual basis. He was unemployed at the time of his arrest. He is single and was living with his parents prior to his arrest.

8.  He has 32 previous convictions, none of them were similar to the present offence. He is currently serving a total sentence of 30 months’ imprisonment imposed on 27 March 2024 for theft and certain driving offences.

Mitigation

9.  Mr P C Lee, counsel for the defendant, quoted paragraph 9 of the Court of Appeal’s judgment in HKSAR v Hsu Yu Yi [2015] 5 HKLRD 545 for the guidance offered by the Court in sentencing money laundering offences.

10.  Regarding the circumstances of the offence, Mr Lee pointed out that there is no evidence that the defendant was the mastermind behind this money laundering scheme, or that he was involved in the predicate offence of cryptocurrency fraud.

11.  The defendant’s culpability lies in his lending his bank account to an acquaintance (described as “an infrequent drinking companion”)  who told him that she had reached her credit limit with her own bank and was in need of a bank account to alleviate her cash flow situation. Without asking why she could not continue to use her own bank account and without getting an assurance from her that she would not put his account to illegal use, he allowed this woman to use his account. He derived no benefit from such an act.

12.  Counsel referred to what Judge Casewell said in his reasons for sentence in HKSAR v Chan Pui Chi and Others [2019] HKDC 1155[1] and to his sentence of 18 months for a total transfer of $89 million into D2’s account in that case. Counsel pointed out that the judge, after referring to the “gradations of culpability” mentioned in HKSAR v Boma [2012] 2 HKLRD 33, took the view that the amounts laundered would comparatively be of less significance in determining sentence for someone who handed over an account’s operation to another with no more knowledge than that it was to be used for some sort of crime, and that he would expect the court to adopt a starting point of sentence between 18 to 24 months’ immediate imprisonment.

13.  Taking account of the amount of money involved, the very short period in which the offence took place, the defendant’s lack of knowledge of the predicate offence, and the role he played in the offence, counsel submitted that 18 months’ imprisonment would be appropriate.

14.  For his plea of guilty, the defendant is entitled to a one-third discount on sentence.

15.  Counsel asked the court when considering totality to take note that the defendant is currently serving a 30 months’ sentence in prison.

16.  The defence has no objection to the prosecution’s application for enhancement of sentence.

Sentencing considerations

17.  Money laundering is a serious offence which attracts a maximum sentence of 14 years’ imprisonment.

18.  Yeung JA in HKSAR v Kamran CACC 400/2004 has said that:

“money laundering is a very serious offence as it is an attempt to legitimise proceeds from criminal activities. Serious offences are very often motivated by financial gains and those who assist criminals in laundering money, indirectly encourage them in their criminal activities”, that “successful deterrents against money laundering could be effective measures against crime”, and that “it is not feasible to lay down guidelines for sentence of money laundering offence, as there is a wide range of culpability.”

19.  According to Hsu Yu Yi, the factors to be considered in sentencing for this offence are: a)  the amount of money involved is a major consideration; b)  a defendant’s level of participation; c)  the sentence imposed on the predicate offence if it can be known; d)  if the case has an international element; and e)  the length of time the offence lasted.

20.  The Court of Appeal in Boma emphasized the importance of deterrence for this kind of offence, pointed out that the amount of money laundered was a significant feature, and set out a non-exhaustive list of other significant features, which includes the nature of the predicate offence, the state of the offender’s knowledge, whether an international element was involved, the sophistication of the offence, whether organised criminal syndicate was involved, the number of  transactions and length of the offence, whether the offender continued to launder funds after knowing that they were proceeds of a serious crime, and the offender’s role.

21.  In Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201, from the money laundering cases which were set out in Hsu Yu Yi with the amounts involved and the sentences passed, Yeung JA observed that:

“[T]he 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.”

22.  In our case, the most significant feature namely, the amount of money laundered, is equivalent to HK$3,733,056.73[2] which was the sum total of 39 deposits made in 2 days. For such a brief period, it was a lot of deposit.

23.  As is not uncommon with this form of committing the offence, i.e. by lending one’s account for others’ use, there is hardly any evidence on what else the defendant did.

24.  In terms of the role played by the defendant in this offence, the facts and the mitigation submissions point to the defendant doing very little else after handing over the control or operation of his account to his acquaintance. Defence counsel submitted that the defendant’s role falls towards the lower end of the “gradations of culpability” mentioned in Boma.[3]

25.  I find it hard to accept that the defendant had received no benefit at all from allowing his account to be used by “an infrequent drinking companion”. Nevertheless, as the Court in Hsu Yu Yi made clear, it is the amount of money involved and not the amount of reward or benefit received by the defendant that is the major consideration.

26.  In the circumstances of this case, and bearing in mind the need for deterrence for this type of offence, I consider 27 months’ immediate imprisonment to be an appropriate starting point. The defendant will be given a one-third discount on sentence for his guilty plea, which will result in 18 months after plea.

27.  A statement dated 30 September 2024 made by Chief Inspector LI Yiu-nam (the statement)  of the Money Laundering and Terrorist Financing Risk Assessment of the Financial and intelligence Bureau was tendered by the prosecution in support of its application under section 27(2)  of OSCO to enhance the sentence on the grounds of prevalence and the nature and extent of harm caused to the community.

28.  From the role he played, the defendant falls under the classification of an “ML stooge” [4], which is defined in the statement as someone who “had assisted in the ML activities but has minimal or no involvement in the predicate offence or has little or no knowledge on the predicate offence.”

29.  The statement concludes with this message: “As can be seen from Table C-E, the use of stooge for ML is increasing in both figures and proportion. There is a rising trend in the use of stooge from 31.38% recorded in the year 2020 to 70.19% recorded in the year 2023 (Table E). Between January and July 2024, the proportion of using stooge accounts for ML activities has increased by 7.66%. The police have spent a lot of resources on crime prevention, advertising and warning people not to ‘sell’ or ‘lend’ their bank accounts to others and could possibly fall trap to the commission of ML offence. However, it seems that the rising trend is continuing albeit all the publicity work.”

30.  The statement points out that the increasing use of ML stooges has hampered the anti-money laundering regime in Hong Kong in that it interfered with the normal operation of the banking system and harmed Hong Kong’s reputation as an international financial centre, encouraged more crimes to be committed, allowed culprits to make use of their ill-gotten gains to engage in a wider range of illegal activities, increased the investigation efforts and resources of law enforcement agencies, and rendered people with low income or little realisation of the consequence of selling their bank accounts more vulnerable to traps set to lure people into surrendering their accounts for monetary rewards.

31.  I accept entirely all the matters set out in the statement, and I find the sentence enhancement application proved beyond reasonable doubt.

32.  I would enhance the sentence by one-third, thereby raising the sentence from 18 months to 24 months.

33.  The defendant is now serving a sentence of 30 months’ imprisonment. Having regard to the totality principle, I would order that 10 months of the sentence for the present offence are to be served consecutively to the 30 months’ sentence he is currently serving in respect of DCCC 595/2023.