The particulars of the offence were as follows.
Dawson Zachary James, between the 7th of February 2013 and 6th day of June 2018, both dates inclusive, in Hong Kong, knowing or having reasonable ground to believe that property, namely, HK$3,443,385.56 deposited into the bank account of the said Dawson Zachary James numbered 383287003882(383827003882?) with Hang Seng Bank, in whole or in part, directly or indirectly, represented the proceed of an indictable offence, dealt with the said property. This was the 3rd count on the indictment.
The 1st count to which you were charged was one of trafficking in dangerous drugs on the 27th day of May, at an industrial unit in Cheung Yick Industrial Building in Chai Wan, the amount of which was about 7 kilogrammes of a solid containing 6 kilogrammes of cocaine, to which the jury found you not guilty. And the 2nd count was the same as the 3rd count in regards of the offence of money laundering in the sum of $1,229,400 cash found in your premises on 27 May 2018, to which the jury also found you not guilty.
In respect of this 3rd count of money laundering, as this is commonly known, the jury found you guilty, and this was a unanimous verdict.
I have heard mitigation from Mr Kwan and Ms Lydia Leung who have helpfully set out in the table of cases submitted. I have had regard to all those cases and also the written submissions by Mr Kwan and Ms Leung dated 17 November 2021. I would just like to add that in the table that Mr Kwan has helpfully set up of summary of cases, that includes the prosecution’s cases as well.
Defendant, you are now aged 28 years of age and you are of clear record, you have no criminal record. At the time of your arrest on 27 May 2018, you were 24 years old. You came to Hong Kong aged 7 years from Australia with your mother and attended primary school and secondary school in Hong Kong. In your own words, you dropped out of school aged 16 and commenced working.
In regards to this offence, the prosecution opened its case on the basis that when police of the Operations Department of the Narcotic Bureau entered the premises to which you rented in the industrial unit in Chai Wan on 27 May 2018, they found the 7 kilogrammes of cocaine and $1.2 million cash, which I have mentioned, was the subject matter of Count 1 and 2 on the indictment. At the time the police entered the premises, a person by the name of Nathan Siu was leaving the premises with appropriately 30 grammes of cocaine and $1 million in cash.
Because of this significant amount of cash found in the premises, the Financial Investigation Division of the Narcotics Bureau became involved in the investigation. In the course of the investigation, the defendant’s only bank account held in your sole name at Hang Seng Bank was identified with unexplained money flows into this account. This account is the subject matter of Count 3 to which, as I have mentioned, the particulars of the offence was about $3.4 million odd dollars between 7 February 2013 and 6 June 2018.
The prosecution case was the magnitude of the amount of cash deposited into the defendant’s account without any identifiable source when compared with the relative paucity of your income and that income was incommensurate to your earning as was shown in your tax returns for the years 2013 and 2015. This therefore gave rise to Count 3.
The prosecution, in this count, did not assert a predicate offence. However, on the jury’s verdict, they found the deposits were the proceeds of an indictable offence. The evidence in this count was overwhelming that the defendant did know that they were proceeds of an indictable offence. The deposits from 2016 onwards at least were proximately, at least four times his monthly income from 2013 to 2015 when he was employed, earning approximately $25,000 a month. They were large compared to his legitimate financial status. The account comprised of mostly deposits with little or no withdrawals of which the defendant could maintain his livelihood after November 2016. No tax returns were filed for this income.
The jury unanimously rejected the defendant’s explanation that this income he earned was from a legitimate business of running events in Hong Kong or being a consultant in events in Japan. There was no documentation at all to show any legitimate commercial transactions to explain the deposits. Given all the evidence before the jury, I am satisfied that having rejected the defendant’s evidence, the defendant did know the proceeds represented the proceeds of an indictable offence. This was the defendant’s sole bank account. He was the only one who had dealt with the funds in the account. He would have been the only one to benefit from the proceeds of this offence.
The appellate courts of Hong Kong have made it plain there is no tariff for this type of offence because of the wide range of culpability involved. This is a recognition of the many and varied ways in which such a crime might be committed. The court in HKSAR v Boma [2012] 2 HKLRD 33 identified at paragraph 40 of the judgment, some of the significant features, although not an exhaustive list, for which the court should look and take into account in sentencing for money laundering. They include: The nature of the predicate offence, if known, and the penalty available for the predicate offence; any international dimension; the sophistication of the offence, including the degree of planning; whether there is one transaction or many and the length of time over which the offence was committed; whether the defendant continues to launder funds after he has discovered, as a fact, the funds are the proceeds of an offence or after he has discovered the nature of an offence which is serious; and whether a benefit has been received, and if so, the nature and size of the benefit. Clearly, the amount involved is also a significant factor.
Adopting the principles, there is, on the evidence, a likelihood that these were the proceeds from the dangerous drugs industry. However, as the prosecution in this case did not assert a predicate event, he shall be sentenced on the basis that there is no proof of the predicate offence. The deposits itself has shown hallmarks of crime proceeds of an illegitimate business. The total of deposits in the account amounted to the amount as I have stated earlier in the indictment. However, the prosecution did not rely on the income from the defendant’s employers of $608,420, the deposit made from the District Court’s suitors’ fund of $5,000 and the money transferred from the defendant’s mother to him of $4,350. They were not included as crime proceeds. I shall therefore deduct that sum of $617,770 from the total. Therefore, the proceeds of the indictable offence amount to $2,825,615.
As regards the length of time of the offence, I take it from the date of the opening of the bank account, which was 3 February 2013 to 18 May 2018, and that is the last date of a deposit was made into this account. That is a period of some five years and three months as the duration of the deposits. There were approximately 800-odd deposits made over that period. Of course, I have to discount those which I have not counted the amount for his salary and the mother, which was two deposits, and the District Court suitors’ fund, which is one deposit. But nevertheless, there was a significant amount of deposits.
There was no international element per se as all the amounts were deposited in Hong Kong into the defendant’s bank account. However, it can be seen from January 2018 to May 2018, there were large amounts of Japanese yen, which was deposited into the defendant’s account but purchased by the bank and converted into Hong Kong dollars.
There was no sophistication of this offence.
Defendant, taking into account all these matters, money laundering, as you know, is a serious offence that you are and were known to be dealing with proceeds of an indictable offence.
Defendant, taking into account all the circumstances, I sentence you to 4 years’ imprisonment.