HKSAR v. A male known as BOMA AMASO

CAC C 335/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 335 OF 2010

(ON APPEAL FROM DCCC NO. 407 OF 2010)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Stock VP:

1.  Legal aid was granted in this case by the single judge because he was concerned about apparent discrepancies in sentences for money laundering offences that seem to have manifested themselves over recent years.

2.  Accordingly, we invited counsel to address us on the question, first, whether this was a category of offence in which guidelines might be useful and, if so, then, second, what those guidelines might be.  We are grateful to counsel for the extensive assistance which they have provided.

3.  The judgment by Cheung JA which follows provides the reasons for the dismissal of this applicant’s application for leave to appeal against sentence.  I add a judgment of my own thereafter which addresses the issue of sentences for money laundering offences, a judgment with which the other members of the Court agree.

Hon Cheung JA (giving reasons for judgment of the Court):

4.  The applicant’s application for leave to appeal against sentence was dismissed by this Court upon the conclusion of the hearing.  We now give our reasons.

The charges

5.  The applicant pleaded guilty to three charges. The first two (Charges 2 and 4) were dealing with property known or believed to represent proceeds of an indictable offence (money laundering) contrary to section 25(1) and (3) of the Organised and Serious Crimes Ordinance (‘OSCO’) (Cap. 455) and the third (Charge 5) was remaining in Hong Kong without the authority of the Director of Immigration after having landed unlawfully in Hong Kong, contrary to section 38(1)(b) of the Immigration Ordinance (Cap. 115).

6.  Of the two money laundering charges, Charge 2 covered the period from 21^st April 2006 to 8^th April 2009 for the sums of HK$200, U$298,177.01 and £7,902.  Charge 4 covered the period from 19 February 2008 to 8 April 2009 for the sum of HK$7,793,068.87.  The total amount involved in these two charges was about HK$10 million.  Deputy District Judge Johnny Chan sentenced the applicant to a total term of 38 months’ imprisonment which is calculated as follows :

(1)   Charge 2

2 years’ imprisonment based on a 3-year starting point, reduced by one-third because of the plea.  4 months of this 2-year term is to be served consecutively to that of the sentence under Charge 4.

(2)   Charge 4

2 years and 4 months’ imprisonment based on a starting point of 3½ years reduced by one-third because of the plea.

(3)   Charge 5

15 months’ imprisonment, six months of which is to be served consecutively to Charges 2 and 4.

Facts

7.  The money laundering charges was in respect of four bank accounts in Hong Kong.  One of them was held in the name of Amegashie Emmanuel Kofi (‘Kofi’) while the remaining three were held in the name of Le Meritz Investment Company (‘Le Meritz’).  The accounts showed that there were inward remittances of money followed by immediate outward cash withdrawals of a similar amount.  The applicant operated the accounts and carried out the activities. The applicant was arrested by the Police on 8 April 2009 at a jewelery shop for using a false credit card.  No identity document of any kind was found on him.  He at the time had in his possession two mobile phones with pre-paid SIM cards.  When appearing in the Magistrates’ Court, in response to a question from Court as to his name, the applicant claimed himself to be Boma Amaso.  There was no entry record into Hong Kong of any person by that name (Charge 5).

Charge 2

8.  The Judge summarised the evidence of the two money laundering charges as follows :

9.  Charge 2 concerns a bank account in Dah Sing Bank.  This bank account was opened by a person in the name of Kofi on 21 April 2006.  A Ghana passport under the name of Kofi was produced when the account was opened.  The account holder also provided a telephone number and a residential address in Yuen Long.  He stated that he was self-employed by an E.K.A. Trading Company. Subsequent investigation revealed that this entity has no registration at the Business Registration Office or the Companies Registry.

10.  Transactions in this account took place between 13 October 2007 and 3 January 2008.  The account was operated by the defendant whose fingerprints were found on the following five withdrawal slips :

	Amount	Date
1)	HK$125,603.24	13 December 2007
2)	HK$125,000.00	13 December 2007
3)	HK$739,884.90	15 December 2007
4)	HK$740,000.00	15 December 2007
5)	HK$405,217.85	20 December 2007

11.  The total deposits received during this period by this account consisted of HK$200, US$298,177.01 and £7,902.  There were altogether eight deposits.  Remittances from the USA and Britain were involved.

Charge 4

12.  Charge 4 concerns three bank accounts held in the name of Le Meritz with Public Bank (Hong Kong) Limited (‘Public Bank’), Citic Ka Wah Bank Limited (‘Citic Ka Wah’) and the Bank of China (Hong Kong) Limited (‘BOC’).

13.  The Companies Registry does not have any record of Le Meritz.  However, Le Meritz has a business registration registered on 22 December 2007 bearing Mahamida Augustine Maahmoa (‘MAM’) as its sole proprietor and its business address was also in Yuen Long, New Territories.

14.  Between 19 February and 12 March 2008, the defendant opened the three bank accounts by using the Business Registration of Le Meritz.  The account with Public Bank was opened on 7 March, the account with Citic Ka Wah was opened on 12 March and the account with the BOC was opened on 19 February. MAM was the sole signatory for all three accounts.  When opening the three accounts, the defendant produced a false passport of the Kingdom of Lesotho in the name of MAM.

15.  The defendant’s fingerprints were found on some bank documents, i.e., the account opening form for the account with Public Bank and some of the withdrawal slips for the accounts with Citic Ka Wah and the BOC.  In the Opening Mandates for the three accounts, the business address of Le Meritz in Yuen Long and a telephone number were provided.  The telephone number was recorded as ‘My num’ in one of the mobile phones seized from the defendant.

16.  As SMS containing information needed for others to transfer funds into the account with the BOC was found to have been sent from one of the defendant’s mobile phones.

17.  The three accounts were operated by the defendant until he was arrested by the police on 8 April 2009.

18.  For the Public Bank account, during the period between 3 March 2008 and 25 March 2009, it received 13 deposits from Algeria and the total amount of deposits was HK$1,769,295.98.

19.  For the Citic Ka Wah account, during the period between 12 March 2008 and 9 October 2008, it received eight deposits from USA and Britain and the total amount of deposits was HK$5,631,438.44.

20.  For the BOC account, during the period between 26 February 2008 and 10 March 2009, it received 10 deposits totalling HK$392,334.45.

21.  In respect of the applicant’s use of the false credit card which led to his arrest he was charged with one count of ‘obtaining property by deception’ and one count of ‘attempting to obtain property by deception’.  He was sentenced by another judge in the District Court (DCCC 1125/2009) to 16 months’ imprisonment which he had served.  The fingerprints left by the applicant on the bank documents were only traceable to him after his arrest for the credit card offence.

The present case

22.  The aggravating features in this case are :

1) large sums of money are involved;

2) the applicant used false identities in the operation of the accounts and he actively operated the accounts for a lengthy period of time;

3) the international element which involved transactions from many countries; and

4) We agree with the Judge that there has been no delay in prosecution.  The principle of totality of sentence has not been breached by reference to the earlier sentence of 16 months’ imprisonment.  If anything, the notional starting point of 4 years’ imprisonment adopted by the Judge is plainly too low. However we did not consider it appropriate to increase the sentence because we have granted legal aid to the applicant for the purpose of considering whether guidelines on sentence should be given.  Stock VP in his judgment has addressed this topic. 

Conclusion

23.  Accordingly the application was dismissed.

Hon Stock VP:

24.  The courts of this jurisdiction and of others have regularly commented that such is the variety of circumstances in which money laundering offences are committed and such the widely different roles played by those convicted of these offences, that it is one of those categories of offence in which it is neither realistically possible nor desirable to attempt guidelines.  Nonetheless, because of the apparent disparities and in the light of counsel’s submissions we have considered the question what assistance, if any, might usefully be provided.

25.  The problem remains that the circumstances in which the offence may be committed are highly variable.  They run from cases where a wife hides money for a husband who is a gambler through to those who wash money that represents the proceeds of vice offences, or trafficking in dangerous drugs, or fraud, or human trafficking or other manifestations of organised crime.  Sometimes it is possible to identify the antecedent offence; other times it is not.  Sometimes the offender knows the nature of the antecedent offence, sometimes he does not.  Sometimes he can be taken to know or believe the monies to be the proceeds of an indictable offence or reckless as to whether or not they were; otherwise he may be shown to know the grounds upon which a reasonable person will so believe without himself actually knowing the funds to be the proceeds of an indictable offence.  Sometimes the offender is the perpetrator of the predicate offence but at other times he lies somewhere down the chain.  Sometimes he is the beneficiary of the laundering process; other times a conduit.  Then there are cases involving an organized and sophisticated scheme where the offender is the director of the laundering exercise; or he may be a lowly employee in the exercise.  The offence may involve a single transaction or, on other hand, many transactions over an extended period.  Deceit to achieve the objective may or may not be involved.  There are cases where all the activity is embraced in a domestic setting but other cases with an international element.  This non-exhaustive postulation of the variety of circumstances suffices to illustrate why it is difficult and undesirable to offer guidelines. It is, in other words, a category of offence in which the sentencing judge is called upon to engage his ‘feel’ for the case bringing to bear his sentencing experience bearing in mind at all times the mischief at which the legislation is directed.

26.  That said, one fully understands and sympathises with the difficulties of legal advisers in providing advice to those who are accused of such offences as to the likely penalty that might, in the event of a conviction, be imposed. Normally, in categories of offence lending themselves to variables that militate against guidelines, advice – even though inexact – can nonetheless be provided by reference to decided cases over an extended period.  But the problem which has arisen in this jurisdiction in relation to this offence is that advice has been rendered difficult by the approach hitherto of the courts.

27.  It is difficult for the adviser to glean a likely range of sentence, first, because of the disparities that have become evident over time in similar cases; and, second, because sentences in some cases involving huge sums appear to be remarkably low when viewed in the light of sentences for cases involving markedly smaller sums and in the light of the maxim penalty of 14 years provided by the statute.

28.  Part of the problem may well stem from the perception of the Department of Justice that by reason of the judgment of this Court, differently constituted but of which I was a member, in HKSAR v Kam Susanto CACC 542 of 2003, 13 May 2005, unreported, that most cases should be tried in the District Court.

29.  That was a case in which the amount of money dealt with was over $471 million.  It does not appear from that judgment (which, unsurprisingly, was not an appeal against sentence) whether the court had engaged in any comparative exercise nor is it apparent either from the judgement itself or indeed from my own recollection whether it was influenced by the fact that the sums involved were the proceeds of bookmaking rather than a more serious offence.  It is however clear that the court was influenced by a perception that cases of this kind may more easily be tried by a single judge rather than by a jury.  Be that as it may, the comment by the court seems to have had an influence which is unfortunate, because an effective seven-year maximum for sums of that order leaves in practical terms very little sentencing leeway for much more usual cases involving several million dollars but serious nonetheless.

30.  Two cases in particular, involving vast sums, and an international element to boot, that strike one as astonishing for having been brought in the District Court are :

(1)   HKSAR v Hui Yat Sing and another CACC 29 of 2007, 13 June 2008, unreported, in which the applicant assisted in the laundering of no less than $6.4 billion, the proceeds of a huge theft of money by employees of a bank on the Mainland; and

(2)   Secretary for Justice v Jerome Yudal Arnold Herzberg [2010] 1 HKLRD 502 in which the defendant was responsible for the international laundering of over $683 million over a prolonged period, conduct that continued after the applicant had been warned about the underlying fraudulent scheme.  The Court of Appeal upon review considered a nine-year starting point to have been appropriate.

31.  The maximum sentence for this offence is one of 14 years’ imprisonment.  Given the number of cases that have come before the courts, given the huge sums involved in quite a few of them, given that laundering the proceeds of offences – often very serious offences indeed – is designed by its very nature to enable criminals to avoid detection, and given the signal importance of preserving Hong Kong’s reputation as an international financial centre of integrity, and given the further vital importance of international cooperation in the fight against money laundering, and therefore against crime which is thereby encouraged, the question whether the maximum sentence available to the courts of this jurisdiction is one that is adequate is a matter upon which we have not deliberated but it may merit some debate and consideration by policymakers.

32.  At present, however, any sentencing exercise must recognise that the maximum sentence is one of 14 years’ imprisonment and in the light of that fact it really is difficult to understand how cases such as the two which I have particularized came to find themselves tried in the District Court.

33.  At the other end of the spectrum, it is difficult to provide guidelines for much smaller sums, for if the amount of money is to be the central basis of the guideline, there is a danger of an inadequate sentence where the sum is relatively small but the predicate offence is particularly serious: for example, where the laundering is intended to prevent the detection of an offence of child kidnapping.

34.  Without structured legislation along the lines of the Australian model – the benefits or disadvantages do not fall for our consideration – the best one can do is to draw the attention of judges to relevant sentencing considerations.

35.  The first factor to which any sentencing court should in this context have regard is the maximum penalty available.  It is not possible to identify the worst case possible and difficult to postulate the worst category of case.  But it is nonetheless helpful to bear the maximum in mind.

36.  The second matter to which the sentencing court must have regard is the fact that in this category of offence, deterrence is paramount.  It is to be remembered that “the criminality in laundering arises from the encouragement and nourishment it gives to crime in general.  Without it many crimes would be rendered much less fruitful and perhaps more difficult to perpetrate”: R v Basra [2002] 2 Cr App R (S) 469 at 472.

37.  Next, we would suggest that the Director of Public Prosecutions should not feel constrained by prior judgments of this Court from bringing cases in the High Court where huge sums of money are involved or where the predicate offence is particularly serious.  True it is that this involves a burden on juries in such cases, but the alternative, in other words, the exclusion of the High Court as a possible forum, brings distortions to justice.

38.  Then there is the question of the amount of money laundered.  This is not the be-all and end-all of a case but is a significant feature.  

39.  We were at one stage of our deliberations minded to provide a suggested starting point for a specified relatively low sum involved in an offence, leaving courts to use that as a base for other sentences but we at once could conjure a myriad of factual variations which might render even that single starting point unwise with the further risk that it might encourage a rigid mathematical approach and progression without proper regard to other individual relevant factors.

40.  Less helpful though this may be than we had hoped, the best we can therefore do is to identify some of the significant features for which the court should look and take into account, though it is not possible to produce an exhaustive list: we can do no better than echo obvious factors that have been referred to by the cases:

(1)   The nature of the predicate offence, if known, and the penalty available for the predicate offence: see R v Karen Monfries [2004] 2 Cr App R (S) 9.  So, for example, where the predicate offence is trafficking in dangerous drugs, the offender should expect a sentence significantly greater than where the predicate offence is gambling.  It has in this regard been said that: “Those who launder large sums which are the proceeds of drug trafficking play an essential role in enabling the drugs conspiracy to succeed and as such can expect severe sentences comparable to others playing a significant role in the supply of drugs although it has to be borne in mind that Parliament has provided different upper limits to a judge’s sentencing process for dealing in Class A drugs (life imprisonment ) and money-laundering (14 years)”: R v El-Debi [2003] EWCA Crim 1767 at [90], (in reference to statutory provisions in England); although it is suggested that there must be a difference between the offender who knows what the predicate offence is and the offender who does not : R v Gonzalez [2003] 2 Cr App R (S) 35 at [13].

(2)   This brings us to the question of the state of knowledge of the offender.  This divides itself in two – knowledge of the nature of the predicate offence, where the predicate offence is known to the court; and knowledge of the fact that the funds are the proceeds of an indictable offence:

(a)   Where the predicate offence is known to the court, the question of knowledge of the offender as to the nature of the predicate offence is relevant in that the person who knows the nature of the predicate offence is more culpable than the person who does not : see Gonzales above at [13] and Monfries above at [11].  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 at [472].  The scheme and purpose of the legislation is to ensure care and honesty in the handling of other people’s money and those who are prepared to handle money on other people’s behalf and turn a blind eye to the source of that money do so at their own risk: see Attorney General’s Reference No. 48 of 2006 [2007] 1 Cr App R (S) 558 at [24].  So the person who is aware of the fact that he is dealing with proceeds of an indictable offence but deliberately chooses not to ask questions is barely less culpable than the person who asks or who is told.

(b)   As to the second question, there seems to me to be unassailable logic in the scheme of the Australian legislation which draws a distinction in culpability between the person who intentionally deals with the proceeds of crime, meaning the person who knows or believes that the funds in question are the proceeds of crime; the person who is reckless as to that question; and the person who is negligent about it.  The legislation makes it a criminal offence to deal with proceeds of an indictable offence where there are grounds to believe that that is the origin of the funds and the offender knows of the grounds, even where the offender does not positively know that the funds originate from the commission of such an offence, so care must be taken in the last category not thereby to dilute sentencing so as to defeat the object of the legislation; but the person who is reckless is more culpable and the person who knows or believes is more culpable still.

(3)   An international dimension will always be a significant aggravating feature; and by international dimension we include money laundered from, or for those operating in, the Mainland.

(4)   The sophistication of the offence is always relevant.  This will include the degree of planning and whether deceit is practised to achieve the objective.

(5)   Where the offence is committed by or on behalf of an organized criminal syndicate, that is an aggravating fact.

(6)   It is relevant to take into account whether there is one transaction or many and the length of time over which the offence was committed.

(7)   As in the case of Herzberg, it will be an aggravating feature where the offender continues to launder funds after he has discovered as a fact that the funds are the proceeds of an offence or after he has discovered the nature of an offence which is serious.

(8)   The sentencing court should have regard to the role of the offender and the acts performed by him.  In this regard, the director of a laundering operation or scheme should attract a greater sentence than a person engaged by him although sentences should be sufficient to deter those who might be prevailed upon by directing minds.  In the case of a person down the chain, the court will wish to have regard to whether a benefit has been received and if so the nature and size of the benefit.  But within the category of persons down the chain there will gradations of culpability.  So for example the drug addict or petty crook who is paid a small sum to open an account and hand over its operation to another with no more participation and no more knowledge than that it is going to be used for some sort of crime is much less culpable than an offender of a different sort not “used” in that way.