COURT: The defendant pleaded guilty to two counts of trafficking in a dangerous drug, contrary to section 4(1)(a) and (3) of the Dangerous Drugs Ordinance (Counts 1 and 2) and four counts of dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organised and Serious Crimes Ordinance (Counts 3 to 6) in the Eastern Magistrates’ Court on 25 January 2024. He was committed to the Court of First Instance for sentence. The defendant had confirmed his plea and admission of the Summary of Facts before me.
The first trafficking count involved the following drugs:
(1) 17.4 grammes of a solid containing 15.1 grammes of cocaine;
(2) 24.64 grammes of a crystalline solid containing 20.4 grammes of ketamine.
The second trafficking count involved 7.84 grammes of cannabis in herbal form.
Counts 3 to 6 are money laundering offences.
(1) Count 3 involved a cash sum of $41,320 found inside a vehicle parked at the parking space on second floor at Banyan Garden.
(2) Count 4 involved a cash sum of HK$412,600 and RMB10 found inside Flat F, 21st Floor, Tower 3, Banyan Garden, Lai Chi Kok (“the Flat”).
(3) Count 5 concerned a Hang Seng Bank account opened on 4 June 2020 in the name of the defendant (“the HSB account”) relating to a total sum of $1,894,730.28.
(4) Count 6 concerned an account with Futu Securities International Hong Kong Limited opened on 1 August 2020 (“the FSI account”), also in the name of the defendant for the sum of $1,240,050.
The defendant was the sole account holder and the sole authorised signatory of the two accounts. In the opening mandate of the HSB account, the defendant declared himself to be unemployed.
Facts admitted by the defendant
Charges 1 to 4
On 6 October 2021, the Customs was conducting anti-narcotics operation at the parking space. At around 6.35pm, the defendant was intercepted. Upon body search, the car key of the vehicle and cash of $41,320 (ie the subject matter of Count 3), three iPhones, two bank cards and amongst other things were found on the defendant.
Unlocking the vehicle with the car key, the following items were found at the storage compartment on the door next to the driver’s seat:
(1) a blue plastic bag containing a total of 17.4 grammes of a solid containing 15.1 grammes of cocaine; and
(2) a yellow plastic bag containing 33 plastic bags containing a total of 24.64 grammes of crystalline solid containing 20.4 grammes of ketamine.
This forms the subject matter of Count 1. Further, two bundles of empty zip-lock bags were found at the trunk of
the vehicle. The defendant was arrested. He admitted under caution that the cocaine and ketamine belonged to him and were intended for distribution.
Search was also conducted at the Flat. Eleven plastic bags containing a total of 7.84 grammes of cannabis in herbal form (that is subject matter of Count 2) and cash of HK$412,600 and RMB100 (ie subject matter of Count 4) were found inside a wardrobe in one of the bedrooms of the Flat.
The defendant was arrested again. Under caution, the defendant claimed the cannabis belonged to him for his self-consumption, and the cash was kept there with no intended use.
The management office of Banyan Garden confirmed that the defendant and another person were the registered tenants of the Flat and that only the defendant has entry records between 7 September and 6 October 2021.
The estimated price of the dangerous drugs involved were as follows:
(a) Cocaine: $18,687.60;
(b) Ketamine: HK$16,434.88;
(c) Herbal cannabis: HK$1,403.36.
Counts 5 and 6
According to the agreed facts, the defendant did not own any landed property or vehicle in Hong Kong. The record of the Company Registry showed the defendant was one of the five directors of a company known as “Hengwei Wholesale Limited”. (“Hengwei”). The defendant did not report any chargeable income to the Inland Revenue Department (“IRD”) between 2019/2020 and 2020/2021, nor did Hengwei file any tax return with the IRD since its incorporation.
Mr Tam Kai-tai Ronald, Treasury Accountant (“Mr Tam”) analysed the transactions of the HSB account and the FSI account and found that:
(a) Between 4 June 2020 and 6 October 2021, covering the period of Counts 5 to 6, there were 242 deposits totalling $1,894,730.28 (subject matter of Count 5) and 252 withdrawals, totalling $1,897,723.99 from the HSB account. The opening balance of $100 was decreased to $6.29 as at 6 October 2021.
(b) 68.65% of the total deposited amounts in HSB accounts were made by transfers. Deposits totalling $1,122,868 (each deposit ranging from $400 to $18,000) were transferred from individuals without any business relationship with the defendant.
(c) 48 cash deposits totalling $593,900 represented 31.34% of the total deposited amount made to HSB account. There was no fixed pattern as to the amount and time of such cash deposits. Mr Tam considered that this indicated that HSB account had been served as a repository for gathering small sums deposited individually.
(d) 157 transfer withdrawals totalling $1,323,013.99 represented 69.83% of the total withdrawals made from the HSB account. 93.73% of the transfer withdrawals (i.e. $1,240,050) were made to FSI account between 1 August 2020 and 23 September 2021. Multiple withdrawals were made in small amounts to FSI account on individual dates within half an hour on the same day.
(e) 68.84% of cash withdrawals occurred during the two weeks from 8 to 22 April 2022 resulting in swift dissipation of funds.
(f) Temporary repository for funds was observed in the HSB account as the quarter-end balance remained low despite the gradually increasing amounts of quarterly deposits received. Majority of the deposits received were quickly withdrawn within the same quarter.
(g) Significant funds injected into HSB account were transferred to FSI account, that is the $1,240,050, from which funds could be further redeployed at the defendant’s discretion. They were sourced from the top few originators of transfer deposits and unknown originators of cash deposits of HSB account. FSI account was a key repository for the funds dissipated from the HSB account.
In the cautioned video-recorded interviews, the defendant did not answer any questions. He admitted that both the HSB and the FSI account belonged to him. The defendant now admits and accepts that at all material times:
(a) he unlawfully trafficked the drugs for Counts 1 and 2;
(b) he dealt with the amounts particularised in Counts 3 to 6, which he knew or had reasonable grounds to believe, that the sums in whole or in part, directly or indirectly, represented the proceeds of indictable offences.
Background and Mitigation
The defendant was 31 years of age at the time of the offences and is now 33 years old. At the time of the arrest, he said he has a 90-year-old father who had since passed away during the time of his custody, a 62-year-old
mother and a 28-year-old brother.
According to his antecedent statement, he was single and claimed to be self-employed as a hawker in the wet market.
The defendant has four previous convictions of trafficking in dangerous drugs. The first in the High Court in February 2011, he was sentenced to 6 years and 9 months’ imprisonment for two charges of trafficking in dangerous drugs. The second appearance was in the District Court in September 2018 when he was sentenced to 3 years 8 months’ imprisonment. Mr Yuen also confirmed that he has been released from jail in May 2020.
In mitigation, the defendant had made a timely guilty plea.
Regarding Count 2, Mr Yuen submitted that the cannabis were for the defendant’s self-consumption.
Mr Yuen submitted that the defendant has expressed remorse and provided me with mitigation letters written by the defendant and a Mr Lee from Hengwei. Mr Lee stated that the defendant was an enthusiastic employee and was appreciative of his work. Mr Lee also said that he would employ the defendant after he had served his sentence. However, according to the agreed Summary of Facts, Hengwei never filed any tax return with the IRD.
Considerations of Sentence
Counts 1 and 2
The leading modern sentencing approach in trafficking cases is set out by the Court of Appeal in HKSAR v Herry Jane Yusuph [2021] 1 HKLRD 290 and HKSAR v Lee Ming Ho [2024] HKCA 150; [2024] 1 HKLRD 1186. I will follow the six steps laid down in Yusuph.
Step one is to identify the relevant guideline band or bracket applicable to the quantity of narcotics concerned.
The drugs involved in both charges are as follows: 15.1 grammes of cocaine; 20.4 grammes of ketamine; and 7.84 grammes of cannabis in herbal form.
In determining the proper overall starting point, I have reminded myself of the sentencing principle for trafficking in cocktail drugs. According to HKSAR v Yip Wai Yin and Another [2004] 3 HKC 367, the court will first need to consider whether the “individual approach” or the “combined approach” should be used. There are also three means of cross-checking the appropriateness of the overall starting point in cases involving trafficking in different types of dangerous drugs. See HKSAR v Chan Yuk Leong CACC 318/2013 and HKSAR v Islam Majharul [2020] 3 HKLRD 146.
For cocaine and heroin, the sentencing tariff can be found in Lau Tak Ming [1990] 2 HKLR 370. For quantities of 10 to 50 grammes, the sentencing band is 5 to 8 years.
The sentencing tariffs for trafficking in ketamine are provided for in R v Hii Siew Cheng [2009] 1 HKLRD 1. For quantities of 10 to 50 grammes, the sentencing band is 4 to 6 years.
The sentencing tariffs for trafficking in cannabis are provided for in AG v Tuen Shui Ming [1995] 2 HKCLR 129 (arp. 136). For quantities under 2,000 grammes, the sentencing band is 16 months or less. That guideline remains the same in HKSAR v Nguyen Thang Loi [2023] 1 HKLRD 1329. The quantity of herbal cannabis involved in the present case is 7.84 grammes. According to HKSAR v Chor Lui [2001] 3 HKLRD 95, the case involved 0.24 grammes of herbal cannabis and a
The mathematically calculated starting points for each type of drug is as follows:
(1) For 15.1 grammes of cocaine, the starting point would be 5 years 4 months’ imprisonment after rounding down.
(2) For 20.4 grammes of ketamine, the starting point would be 4 years and 6 months’ imprisonment after rounding down.
(3) For 7.84 grammes of cannabis, the starting point would be 3 months’ imprisonment.
For the purpose of this case, I will adopt the combined approach and use cocaine as the base drug since it is the more potent drug. I will then apply the three means of cross-checking, namely, the “absurdity test”, the “conversion test” and the “ratio test”. I will for the purposes of these calculations ignore the 7.84 grammes of cannabis as the quantity involved was insignificant, and would in any event have no or negligible effect on the overall sentence in light of the larger quantities of the more potent drugs. (see HKSAR v Cheung Wai Man [2019] 1 HKLRD 817).
For the absurdity test, notionally adding up all the drugs seized minus the cannabis to arrive at a total of 35.5 grammes of cocaine, the starting point would be 6 years and 10 months’ imprisonment.
For the conversion test, by converting all the ketamine into cocaine, this will give a total of 23.43 grammes of cocaine and would attract a starting point of 6 years’ imprisonment. I also cross-checked the difference if ketamine was used as the base drug. If the cocaine was converted into ketamine, this will give a total of 57.06 grammes which would attract a starting point of 6 years and 1 month’s imprisonment.
Under the ratio test, again ignoring the cannabis, 42.5 per cent of the quantity is cocaine and 57.5 percent of the quantity is ketamine. Applying the ratio test would result in a starting point of 5 years and 11 months’ imprisonment.
The offences in Counts 1 and 2 occurred on the same day, at different locations. I consider the dangerous drugs particularised in Counts 1 and 2 ought to have been dealt with together as though they have been found together and form one count of trafficking in dangerous drugs: see HKSAR v Lam Chi Wa [2009] 1 HKLRD 483 at paragraph 38. I would regard the two offences as representing one occasion of trafficking in the total amount of drugs and impose a sentence on both offences for that total. This is to reflect the defendant’s culpability and reality of the situation: HKSAR v Wan Lau Mei [2014] 4 HKC 75 at paragraphs 27 to 30.
Taking into account the results of the various tests mentioned, I will adopt a combined notional starting point of 6 years in respect of Counts 1 and 2.
Steps two and three are to assess the defendant’s role and culpability based upon the evidence and where within the guidelines the defendant should lie. I accept Mr Yuen’s submission that there is no evidence before me suggesting that the defendant had any further role beyond the culpability of a courier or storekeeper. I therefore assess his culpability on that basis. I do not see any basis for departing from the mathematically calculated starting point.
Steps four and five require me to consider whether there are any aggravating factors or any mitigating factors. There are two aggravating features. First, presence of a cocktail of drugs, thus allowing it to cater for a far wider market: see Chan Yuk Leong CACC 318/2013 at paragraph 23 and HKSAR v Islam Azharul [2020] 1 HKLRD 644. Second, there is also the issue of the defendant’s criminal records which may suggest he is a persistent offender. He has four criminal records for drug trafficking and the present and four previous convictions all occurred relatively shortly after his release from prison for the sentence of the earlier sentence.
In Lee Ming Ho at paragraph 70, the Court of Appeal held that the trafficker’s previous convictions of trafficking offence is “better understood as a separate factor which is capable of aggravating the sentence of an offender who has not learnt his lesson and repeated the offence, thus requiring a significant element of personal and public deterrence.” This is a matter within the discretion of the sentencing judge.
However, in determining an enhancement to a sentence by any aggravating factor, I should ensure the degree of enhancement should be reasonably proportionate to the basic sentence and the total ultimate sentence should not be excessive. The notional starting point is enhanced by 6 months, that is a starting point of 6 years and 6 months’ imprisonment.
The Court of Appeal made clear in Yusuph, in cases of trafficking in a dangerous drug, personal circumstances will count for little unless they are exceptional.
Mr Yuen then submitted in his written submission that the cannabis in Count 2 was for the defendant’s own consumption.
The threshold test for self-consumption was whether “all or a significant proportion” of the drugs was intended by the defendant for his own consumption. See HKSAR v Wong Yuet Hau [2002] 1 HKLRD 69 and HKSAR v Chow Chun Sang [2012] 2 HKLRD 1121. The primary task of the sentencing court is to determine where the truth lies in a claim of self-consumption and whether there is a proper factual and evidential basis.
Having considered the surrounding circumstances, I will not accept this contention as it was unsupported by any evidence. I made known my preliminary views to the defence. Mr Yuen confirmed the defendant would not be giving evidence in the witness box to support his claim for self-consumption.
I also note that even if a small amount of cannabis in Count 2 might be of the defendant’s own consumption, there will not be any significant change in the sentence because possession of dangerous drugs for self-consumption itself carries a prison term with possible enhancement for the latent risk factor which might offset much of the practical value of the mitigation based on self-consumption: see Wong Yuet Hau at page 79J to 80B.
The real mitigating factor in this case is the defendant’s guilty plea. He is entitled to a one-third discount of the
starting point of 6 years and 6 months which brings the sentence down to 4 years and 4 months’ imprisonment for both Counts 1 and 2.
Counts 3 to 6
I will now deal with the money laundering offences.
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 his income, and those deposits were incommensurate to his earning as he did not report any chargeable income to the IRD between the years of 2019/2020 and 2020/2021. This therefore gave rise to Counts 3 to 6.
As to the four money laundering charges, Mr Yuen submits there was no basis that the defendant knew the sums involved were related to any indictable offence nor was there direct evidence showing the sums for Counts 3 and 4 were related to Counts 1 and 2.
In terms of dates, Mr Yuen says Counts 1 to 2 on trafficking occurred on 6 October 2021, whereas the period for Count 5 commenced from 1 August 2020, a year before Counts 1 and 2.
There was no evidence showing the defendant assisted, supported or encouraged the commission of any indictable offence behind Counts 3 to 6.
And Mr Yuen also submits the defendant does not have actual knowledge that the funds came from an indictable offence but that he had reasonable grounds to believe so.
He says there was no evidence of international element or other aggravating factors shown and that funds from FSI account came substantially from HSB account.
The defence submits that the defendant only has reasonable grounds to believe that the sums for Counts 3 to 6 are proceeds from an indictable offence, instead of actual knowledge. The defence also submits there was no evidence to show the defendant’s actual knowledge, participation, assistance, or encouragement with any indictable offence behind Counts 3 to 6 or the source of the monies.
By reason of his own plea in Counts 3 to 6, the defendant must have accepted that these sums of cash represented the black or illicit money which he had reasonable grounds to believe represented proceeds of an indictable offence.
In HKSAR v Xu Xia Li [2004] 4 HKC 16, the Court of Appeal found that it made no distinction to the culpabilities of a money launderer based only on reasonable belief of the source of the money and that of actual knowledge. The provision did not attach different capabilities to the two types of mens rea. It was held in the context of money laundering, the nature of the indictable offence from which the money was derived was of no particular significance in sentencing, save that if the defendant knew that the money was derived from a very serious crime, it would be an aggravating feature to be taken into account when sentencing.
When considering the defendant’s knowledge about the relevant indictable offence, I should not therefore interpret the facts in the most unfavourable way against him.
In SJ v Ngai Fung Sin Apple [2013] 5 HKLRD 104, Yeung VP held at paragraph 44:
“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...”
There were no sentencing guidelines for the offence of dealing with proceeds from an indictable offence. Mr Yuen referred me to HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545 at page 209. The Court of Appeal set out the relevant factors to be taken into account when determining sentence at page 9, paragraph 9:
(a) The amount of money involved is a major consideration, and not the amount of benefit received by a defendant in the transaction.
(b) The culpability of the offence lies in the assistance, support and encouragement offered to the commission of an indictable offence. So a defendant’s level of participation and the number of occasions on which he is involved in the money laundering activities are relevant factors to be considered.
(c) The offence of dealing with proceeds from an indictable offence does not necessarily have any direct correlation with the indictable offence in question. However, if the relevant indictable offence can be identified, the court may take into account the sentence imposed on the indictable offence per se when determining the sentence of the dealing offence.
(d) If the case has an international element involving activities carried out across different regions, the court may impose a more severe sentence. This is to protect Hong Kong’s
reputation as an international finance and banking hub from being tarnished.
(e) The length of time the offence lasted.
The appellate courts of Hong Kong have made it plain that there is no tariff for this type of offence because of the wide range of culpability involved: see HKSAR v Lam Hing Wan (CACC 387/2016) at paragraph 31. This is due to the many and varied ways in which such a crime might be committed.
The leading case on approach to sentencing in money laundering cases can be found in HKSAR v Boma [2012]2 HKLRD 33 which sets out an eightfold approach that the court should look and take into account in sentencing for money laundering. The court must look at the nature and penalty for the predicate offence, the knowledge or belief of the predicate offence on behalf of the money launderer, whether there is any international dimension, the sophistication of the offence, including the degree of planning, whether there is criminal syndicate involved, things such as the number of transactions and the length of time involved, any subsequent knowledge of the predicate offence discovered by the defendant and the role and acts of the defendant in the case. Clearly, the amount of money laundered is also a significant factor. The court also emphasised that deterrence is paramount in this category of offence, see paragraphs 35 and 36.
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 the present case did not assert a predicate event or offence, the defendant shall be sentenced on the basis that there is no proof of the predicate offence. The deposits itself have clearly shown hallmarks of crime proceeds of an illegitimate business. The total of deposits in the account amounted to the amounts I have stated earlier in the indictment.
As regards the length of time of the offence, Counts 3 and 4 are in relation to the amounts seized in the vehicle and the Flat on 6 October 2021. For Counts 5 and 6, I take it from the date of the opening of the bank account, which was June 2020 to 6 October 2021, and that is the date when the defendant was arrested for the drug trafficking offence.
That is a period of some one year and four months as the duration of the deposits. There were 242 deposits and 252 withdrawals from the HSB account, within which
142 transactions were made to FSI account over that period. There was a significant amount of deposits and withdrawals.
There was no international element as all the amounts were deposited in Hong Kong into the defendant’s HSB bank account and then transferred to FSI account.
The account activities in Counts 3, 4 and 5 involved the use of cash. This made it difficult to trace the source of funds. That said, I consider the modus operandi was not complicated or sophisticated and there was relatively little attempt to disguise the proceeds of crime.
I accept there is no evidence in the present case showing that the funds received by the accounts were related to any predicate offence. However, the defendant is the sole owner
of the accounts and have retained the ultimate control of the accounts and should have paid attention to its transactions on a regular basis. I cannot overlook the fact that over 1.2 million went through the account within a period of one year. By using his bank account and allowing funds of unknown origins to pass through his HSB account, the defendant played a pivotal role in helping the masterminds of criminal activities to access their illegal funds without revealing their identities.
As this court must also take into account the amount involved, the defendant dealt with $41,320 in Count 3; the amount of $412,600 in Count 4; the amount of $1,894,740.28 in Count 5; and $1,240,050 for Count 6.
In Secretary for Justice v Wan Kwok Keung, the Court of Appeal reiterated that “the sentencing starting point is 3 years or so where the ‘black money’ involved is between 1 million and 2 million”.
Based on the above, I adopt the following starting points:
(a) Count 3: 12 months, after one-third discount for guilty plea, reduced to 8 months.
(b) Count 4: 18 months, after one-third discount for guilty plea, reduced to 12 months.
(c) Count 5: 3 years, after one-third discount for guilty plea, reduced to 2 years.
(d) Count 6: 3 years, after one-third discount for guilty plea, reduced to 2 years.
Totality
I now consider the total sentence for all six charges. Where a trafficker is also a launderer of proceeds of the very same drug trafficking, allowance could be made by making the whole or substantial part of the sentences concurrent.
But where the funds laundered are not referrable to the actual drug trafficking charged, then it is only in the
context of totality that a sentencer should consider making some part of the sentence on the money laundering charges concurrent to the sentence for drug trafficking. See HKSAR v Lam Chi Wa [2009] 1 HKLRD 483 at paragraph 33.
Although Counts 1 to 4 share the same date, there is no admission by the defendant that the sums particularised in Counts 3 to 4 are referrable to proceeds from drug trafficking. Counts 5 and 6 predates the period of Counts 1 to 4, thus the offences under Counts 5 and 6 are entirely separate and distinct from Counts 1 to 4.
I also bear in mind that the sum of $1,240,050 deposited in FSI account for Count 6 was transferred from the HSB account in relation to Count 5.
I now apply the totality principle and standing back and determine what a just sentence would be for the overall culpability of the defendant.
As was held in HKSAR v Sum Ka Wa [2024] HKCA 760:
“the mechanism of partly consecutive, partly concurrent sentencing is a very useful tool in the armoury of any court, since it enables the sentencer to give effect to circumstances (reflected in other charges or counts) which necessarily add to the defendant’s criminality, whilst, at the same time, ensuring that the total sentence is not excessive. However, caution should be exercised lest the imposition of a consecutive sentence, which in itself may be a perfectly acceptable sentence for the individual offence concerned, or a partly consecutive element of that sentence, results in an overall sentence that is too great for the overall criminality of the defendant.”
I am of the view that the ultimate sentence of 6 years’ imprisonment is appropriate and is a just sentence for the defendant’s overall criminality.
I shall order as follows:
(1) Counts 1 and 2 are to run concurrently, making a total of 4 years and 4 months.
(2) Counts 3 and 4 are to run concurrently. 4 months of the sentence imposed on Counts 3 and 4 will be consecutive to the sentence in Counts 1 and 2, making a total of 4 years 8 months.
(3) Now in relation to Counts 5 and 6, the starting point of 3 years is reduced to 2 years. Counts 5 and 6 are to run concurrently, taking into account the totality principle, and of that, 16 months will run consecutively to the 4 years 8 months imposed on Counts 1 to 4, making a total of 6 years’ imprisonment.
And therefore, the total sentence will be one of 6 years’ imprisonment.
Defendant, I sentence you to a term of 6 years’ imprisonment.