HKSAR v. YU TSZ SANG

DCCC 666/2024

[2024] HKDC 2093

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 666 OF 2024

________________________

________________________

________________________

REASONS FOR SENTENCE

________________________

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, Chapter 455. This offence is commonly known as “money laundering”.

Facts

2.  When the defendant pleaded guilty, he admitted the facts stated in the written Summary of Facts prepared by the prosecution as well as the facts stated orally by the learned Public Prosecutor Mr. Lee when this Court sought clarification. The admitted facts were as follows.

3.  Mr. Dennis Spear was the victim of a telephone deception case that happened in the United States of America. Over the phone, the swindler claimed to be a law enforcement agent and accused Mr. Spear of engaging in a crime, but said that Mr. Spear might prove his innocence if Mr. Spear would remit various sums of money into the bank accounts designated by the swindler. Believing the swindler, Mr. Spear compiled with the instructions given by the swindler. 

4.  One of the remittances was made by Mr. Spear on 10 November 2020 when he remitted a sum of US56,000 to the personal account held by the defendant with the Bank of China (Hong Kong)  Limited (“the Account”)  as instructed by the swindler.

5.  After Mr. Spear had made all the remittances as instructed, the swindler disappeared.  When Mr. Spear realized that he had been deceived, he made a report to the police.  Because of the deception, Mr. Spear had lost US$454,000 in total.

6.  The Account was opened on 19 October 2020. When the defendant applied to set up the Account, he claimed to the bank that he required the Account for saving money and dealing with his personal expenses, and that the source of funds was his pocket money. He further stated that he resided in a flat in Ko Po Tsuen, Kam Tin, and that he was a student earning about HK$10,000 or less a month. He submitted his Hong Kong identity card to the bank as proof of his identity, and the bank staff made a copy of his identity card.  Since the opening of the Account on 19 October 2020, the defendant had been the sole signatory and holder of the Account.

7.  On 6 November 2020, money was credited into the Account for the first time. 

8.  Between 6 and 20 November 2020, a total of U$567,103.8 had been credited into the Account through 6 remittances. Other than the remittance made by Mr. Spear from the USA, it was not clear whether the other 5 remittances were made in Hong Kong or overseas.

9.  For each remittance, the money so credited into the Account was converted into Hong Kong dollars, and then transferred out to other personal bank accounts that were not held by the defendant via the Faster Payment System or bank transfer on the very same day when the remittance was received. It was not clear whether the bank accounts that received the money subsequently were local or overseas accounts.

10.  The Account was closed by the bank on 6 April 2022 when there was a balance of HK$119.30 in the Account.

11.  Police investigation revealed that the defendant left Hong Kong on 20 November 2020, and returned on 24 January 2022. 

12.  The defendant was arrested by the police on 1 April 2023.  During a video-recorded interview on the same day, the defendant said under caution that he applied for a job to distribute leaflets in September 2020, and that the recruiter asked him to open a Hong Kong and foreign currency accounts as his payroll account. He held personal accounts with the Hang Seng Bank, HSBC and Standard Chartered Bank, but he opened the Account because the recruiter requested for an account held with a state-owned bank.  After he had opened the Account, he gave the ATM card and PIN, internet banking login ID and passcode to an unknown male in Nam Cheong and received HK$2,500 in exchange. 

13.  With the consent of the defendant, the police searched his home in Ko Po Tsuen, and seized (a)  two pages of integrated monthly statement of the Account, and (b)  a letter informing the defendant of the termination of the Account. The documents were dated 6 April 2022.

14.  For the years of assessment 2019/2020 and 2020/2021, the defendant had not filed any tax return. Record held by the Inland Revenue Department showed that the defendant worked for Wan Kee Management Limited as a sales assistant between 5 and 18 June 2019, earning HK$5,500. The Inland Revenue Department had not received any other Employer’s Return of Remuneration and Pensions in respect of the defendant.

Criminal record of the defendant

15.  The defendant had a clear criminal record.

Personal and family background

16.  The defendant is now 24 years old.  He was born on 9 June 2000 in the Mainland (Haifeng County, Guangdong Province)  and moved to Hong Kong in 2004.  He had finished his secondary education in Hong Kong. He then received university education in Taiwan.  He was studying for a bachelor degree in statistics.  After he had completed the first year of his studies in Taiwan, he returned to Hong Kong in 2022. He then applied for temporary suspension of his studies. After his arrest in 2023, he applied for continuous suspension of his studies since he was not in a position to obtain a visa to go to Taiwan because of this case.

17.  The defendant had worked as a sales assistant and a warehouseman before.  After his return to Hong Kong in 2022 and until his remand in custody, he worked as a construction worker.

18.  The defendant is single. He is living with his parents, one younger sister and one younger brother.  His father is a 55-year-old driver, and his mother is a 46-year-old housewife. His younger sister is a university student, while his younger brother is in secondary school.

Mitigation

19.  The learned defence counsel Mr. Richard Donald pointed out that the offence took place 4 years ago in 2020 when the defendant was a naïve young man of only 20 years old.  At that time, the defendant read an advertisement and was lured into thinking that he could make some quick money, and he wished to relieve the financial burden of his parents who had to pay for his university fees and all household expenses. 

20.  According to Mr. Donald, the defendant opened the Account by depositing HK$100 of his own money. After the Account was set up, he provided details of the Account and the ATM details to his recruiter, and he had no further dealings with the Account thereafter. He had no control over the use of the Account, and he was not involved in any of the predicate offences. He was just a minor cog and played a very small though necessary role in the entire criminal scheme. On the other hand, the defendant was himself duped into getting involved and did not realize the seriousness of what he was doing.

21.  Mr. Donald stressed that the defendant was remorseful for his action. He was fully co-operative with the police in the investigation, and readily admitted his role and involvement in the offence. He pleaded guilty at the first opportunity. As a result of his willingness to plead guilty, the victim was not required to travel from USA to Hong Kong to testify, and considerable costs and expenses were saved.

22.  Mr. Donald also pointed out that the offence took place 4 years ago, and that the defendant was arrested on 1 April 2023. Although the defendant was given bail, he was unable to continue with his university studies due to the on-going police investigation into the offence. The defendant then lost his liberty on 8 April 2024 when he was charged and remanded into custody.

23.  Mr. Donald cited a number of authorities to assist this Court in determining the appropriate sentence. The cases he referred to were HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201, HKSAR v Wang Yu Hsin (CACC173/2009), and HKSAR v Yam Kong Lai [2008] 5 HKLRD 384.

24.  Mr. Donald pointed out that the amount of money involved in this case was US$567,103.8, which was equivalent to approximately HK$4,420,000. Having considered the authorities, he submitted that the appropriate starting point after taking into consideration the aggravating factors in this case should be 4 years’ imprisonment, which should be reduced because of the mitigating factors. 

25.  Mr. Donald stressed that the defendant was young, naïve and vulnerable at the time of the offence, that he came from a good family, and his parents were very concerned with the defendant, and attended Court today to show their support. Mr. Donald also submitted that the defendant had now lost the chance to finish his university education in Taiwan because he would no longer be able to get a visa to go to Taiwan due to his present criminal conviction, and this by itself already constituted a heavy punishment to the defendant.  Mr. Donald also argued that there was delay between the arrest and the prosecution of the defendant.

26.  Mr. Donald produced two mitigation letters written by the defendant and his parents respectively. The contents of these two letters were duly noted by this Court.

Application for enhancement of sentence

27.  Pursuant to section 27 of the Organized and Serious Crimes Ordinance, the prosecution applied for an enhancement of the sentence. To support the application, the prosecution produced the witness statement made by Chief Inspector Li Yiu-nam pursuant to section 27(2)  of the same Ordinance. 

28.  Mr. Donald did not object to the production of the statement made by Chief Inspector Li, and did not require Chief Inspector Li to be cross-examined.  Mr. Donald said that the defendant did not oppose the enhancement application, but submitted that when the Court considered the extent of enhancement, the Court should take into account the minor role played by the defendant in the offence.

Reasons for sentence

29.  Money laundering is a serious offence. Section 25(3)  of the Organized and Serious Crimes Ordinance provides that the maximum penalty upon conviction on indictment is a fine of HK$5 million and imprisonment for 14 years.

30.  Since the facts of money laundering offences vary from case to case, there are no sentencing guidelines, but the sentencing principles are clear.

31.  In Wan Kwok Keung, the Court of Appeal stated, in paragraph 13 of the judgment, that:-

“Generally, the sentence for “money laundering” offence should mainly reflect the amount of “black money” laundered and not the benefit obtained by the defendant or others. The reason being that it is very difficult to prove the benefit concerned, and in most “money laundering” cases, there may not be evidence to show from what indictable offence the “black money” are in fact derived. Of course if there is information to prove that the “black money” is originated from serious crimes, including drug trafficking, kidnap and blackmail, illegal human trafficking, other organized crimes, etc. or the defendant’s benefit is huge, then the sentence should be adjusted upward.”

32.  The same principle was reiterated by the Court of Appeal in Secretary for Justice v Ngai Fung Sin Apple [2013] 5 HKLRD 104. In paragraph 44 of the judgement, the Court of Appeal stated:-

“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 crimes 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 (see Secretary forJustice v Lau Man Ying [2012] 4 HKLRD 429 and HKSAR v Xu Xia Li & Anor [2004] 4 HKC16). Based on the same rationale, the fact that the defendant of a “money laundering” case has not obtained any financial benefit is not a mitigating factor.”

33.  In HKSAR v Boma Amaso [2012] 2 HKLRD 33, the Court of Appeal pointed out that deterrence was the paramount sentencing consideration, but cautioned that the amount of money laundered was not the be-all and end-all of a case though it was a significant feature. It further provided a non-exhaustive list of factors, such as the nature of the predicate offence, the state of the offender’s knowledge, any international dimension in the operation, the sophistication of the offence including the degree of planning, the involvement of organized criminal syndicate, the number of transactions, the length of time over which the offence was committed, whether the offender continued to launder funds after discovering that the funds were proceeds of a crime, as well as the role of the offenders and the acts performed by him.

34.  In the present case, the defendant set up the Account and sold it to the recruiter. There is no evidence that he knew or participated in the predicate offence, or he had shared the proceeds of the crime.  However, it must be clear to him when he sold the Account that it was likely for the Account to be used for an illegal purpose. It must also be clear to him that it was likely that the Account would be used to receive or transfer foreign currency as he was told specifically by his recruiter to set up a Hong Kong and foreign currency account.

35.  As a matter of fact, the 6 remittances into the Account between November 6 and 20, 2020 were all in US dollars, and one of these 6 remittances, i.e. the one made by Mr. Spear on 10 November 2020, had been proven to be the proceeds of a deception offence. To this extent, the predicate offence was therefore known. There was also an international dimension in this money laundering operation because Mr. Spear was deceived in the USA and the proceeds of the crime were remitted to Hong Kong for them to be transferred out to the swindler, even though it was not clear whether the swindler received the money via a local or an overseas bank account.

36.  While the defendant did not know or participate in the predicate offence, he must have reasonable ground to believe, as confirmed by his guilty plea, that the Account would be used by his recruiter to deal with the proceeds of an indictable offence.  According to the statement given by Chief Inspector Li, the role played by the defendant is defined as a “money laundering stooge”, as distinguished from the masterminds of the offence, or from the person whose role in the offence is uncertain.

37.  Chief Inspector Li stated that anti-money laundering regime in Hong Kong was hampered by the increasing use of stooges for money laundering activities because the increasing number of stooge accounts would (a)  interfere the normal operation of the banking system, affecting negatively the reputation of Hong Kong as a well-known international financial hub, (b)  form multiple layers of “shields” concealing the identity of the masterminds behind, making it difficult if not impossible for the police to identify the masterminds behind, (c)  encourage more crimes to be committed, as the masterminds could easily get away from their criminal liability, and (d)  make money laundering easier, which enables the culprits to widen the range of their illegal activities with their illegal gains. Chief Inspector Li also pointed out that the increasing number of stooge accounts meant that the law enforcement agencies had to put in more investigation effort and resources, and people with low income or less awareness of the consequences of selling their bank accounts were  more likely to fall prey to the traps set up by the culprits to surrender their bank accounts for monetary reward.

38.  In light of the nature of the offence, the harm caused by the use of stooge bank accounts in money laundering, and that the primary consideration in sentencing was deterrence, it is clear that the only appropriate sentence in this case is one of imprisonment. In fact, Mr. Donald did not seek to argue otherwise. He just asked for leniency to be extended to the defendant.

39.  As to the quantum of the prison sentence, Cheung JA in Hsu Yu Yi listed out the sentences in a number of money laundering cases, and the Court of Appeal in Wan Kwok Keung provided a summary of that review.  The Court of Appeal stated that if the amount of “black money” was between HK$1 million and HK$2 million, the appropriate starting point of the sentence to be imposed should be 3 years’ imprisonment; and the starting point would be increased to 4 years’ imprisonment if the amount was between HK$3 million and HK$6 million, and imprisonment for 5 years or more if the amount was HK$10 million or more.

40.  In the present case, the money laundered through the Account was equivalent to approximately HK$4,420,000. Having considered the authorities submitted by Mr. Donald, the amount of money involved, and the other factual matters pertaining to this case, I agree with the submission of Mr. Donald to the extent that if the defendant were an adult when he committed the offence, the appropriate starting point of the sentence was imprisonment for 4 years (or 48 months).

41.  Mr. Donald stressed that when the defendant committed the offence in November 2020, he was a naïve and vulnerable young man less than 21 years old.  I agree that this is a mitigating factor but I shall bear this factor in mind when fixing the starting point of the sentence rather than using it as a factor to reduce the starting point. Bearing in mind that the defendant was 20 years and 5 months old when he committed the offence, I hold that the appropriate starting point is imprisonment for 45 months.

42.  As to the mitigating factors, since the defendant has entered a timely guilty plea, he is entitled to the full one-third discount. In other words, the term of imprisonment is reduced to 30 months.

43.  Mr. Donald argued that there was a delay in prosecution. The learned Public Prosecutor Mr. Lee filed a chronology of events leading to plea and sentence. Mr. Donald did not object to the production of this chronology and made no further submissions.

44.  In this chronology, the prosecution has listed out every step that had been taken from the time when Mr. Spear filed his report to the Hong Kong police on 11 March 2021. It is not necessary to recite herein each event stated in the chronology. Suffices to say that the chronology indicates that there had been no undue or inordinate delay in the investigation, arrest and prosecution of the defendant. In any event, the defendant was arrested on 1 April 2023, and he was taken to Court on 8 April 2024. There was a time gap of only about a year, and this cannot by any standard be a period of undue delay. I decline to reduce the defendant’s sentence on this ground.

45.  Perhaps just to complete the picture, Mr. Lee informed this Court that Mr. Spear had in fact remitted money into the bank accounts held by 3 different Hong Kong residents including the defendant, which meant that the police had to conduct investigation into 3 persons instead of just the defendant. I find no inordinate delay in the police investigation.

46.  I also do not consider the fact that the defendant could no longer continue his university education in Taiwan to be a mitigating factor.  He knew full well before the offence that he might lose the opportunity to study if he had to serve his sentence for breaking the law.

47.  I have considered all the mitigation raised by Mr. Donald as well as by the defendant and his parents. It is clear to me that there is no other valid ground upon which the defendant’s sentence can be reduced further.  In other words, if there were no enhancement of the defendant’s sentence pursuant to section 27 of the Organized and Serious Crimes Ordinance, the appropriate sentence to be imposed on the defendant would be imprisonment for 30 months.

48.  Of course, there is an application by the prosecution for enhancement of the sentence. The defendant does not challenge the evidence of Chief Inspector Li. I attach full weigh to his evidence.  The defendant also does not oppose the application, but asks for enhancement to be as little as possible in light of the role played by the defendant.

49.  From the evidence of Chief Inspector Li, I am satisfied that offences of deception and money laundering are prevalent and on the increase. In 2020, the total number of deception and money laundering cases were 16,643, but the number keeps on rising, up to 20,114 cases in 2021, 28,936 cases in 2022, 42,004 cases in 2023, and 33,978 cases in the first 9 months of 2024.

50.  In addition, from the evidence of Chief Inspector Li, I am satisfied that the use of stooges for money laundering is increasing in both figures and proportion. The data provided by Chief Inspector Li shows that in 2020, among the 2,422 persons arrested, only 760 of them (or 31.38% of the persons arrested)  were stooges, while the corresponding data were 3,807 persons arrested with 2,220 of them (or 58.31%)  being stooges in 2021, 5,264 person arrested with 3,708 of them (or 70.44%)  being stooges in 2022, 9,239 persons arrested with 6,485 of them (or 70.19%)  being stooges in 2023, and 7,788 persons arrested with 5,900 of them (or 75.76%)  being stooges in the first 9 months of 2024.

51.  I am satisfied that the use of stooge accounts is prevalent in the commission of the offence of money laundering which is one of the specified offences as stipulated in the Organized and Serious Crimes Ordinance, and that the prevalent use of stooges in money laundering offences has caused considerable harm to the community either directly or indirectly. I am satisfied that this is a case where enhancement of sentence should be made.

52.  In addition, it is clear from the data provided by Chief Inspector Li that despite the significant increase in the number of deception and money laundering cases between 2020 and the first 9 months of 2024, due to the prevalent use of stooges in money laundering offences, the number and the proportion of arrested persons who were the masterminds of the predicate offences remain low. The number of arrested persons who were masterminds were 1,633 (or 67.42%)  in 2020, but the corresponding figure and proportion dropped significantly thereafter to 1477 (or 38.8%)  in 2021, 1,437 (or 27.30%)  in 2022, 2,551 (or 27.61%)  in 2023, and 1,803 (or 23.15%)  in the first 9 months of 2024. In my view, deterring people from acting as stooges will have the effect of deterring people from committing the predicate offences of deception and money laundering offences.  To achieve this sentencing purpose, I hold that the sentence to be imposed on the defendant should be enhanced by one-third.

53.  For these reasons, the term of imprisonment to be imposed on the defendant is enhanced from 30 months to 40 months. The defendant is so sentenced accordingly.