HKSAR v. GONG ZHEN

DCCC 625/2024

[2025] HKDC 70

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 625 OF 2024

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REASONS FOR SENTENCE

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1.  The Defendant pleaded guilty to one charge of money laundering.

Summary of facts

2.  PW1 was a victim of an online fraud.  He made multiple transaction into various bank accounts provided by the fraudster.

3.  On 3 October 2023, PW1 deposited HK$20,000 into the Defendant’s bank account by way of FPS transfer into a mobile phone number 59312178 which was the Defendant’s number.

Investigation

4.  According to the opening mandate of the account in August 2023, the Defendant was the account holder and stated that his job was a manager/executive with a salary of HK$50,000/month.  His address was in Shenzhen, China.

5.  The bank statement showed the deposit of HK$20,000 into the Defendant’s account.

6.  Between 31 August 2023 and 5 October 2023, a total of about HK$3,243,496.82 (HK$1,860,169.00 + USD105,006.54 + AUD15,000.00 + CAD69,480.00)  was deposited into his account via 82 deposits.

7.  While a total of HK$3,243,452 was withdrawn via 44 withdrawals, showing a mirror pattern.

Arrest and caution

8.  On 5 February 2024, the Defendant was arrested with an ATM card of the account with him.

9.  The record of interview stated the following:-

(a)  He lived in Shenzhen and stopped working since August 2023. He opened an account in Hong Kong in August 2023.

(b)  His salary from various job was on average about $6,000 to $7,000 per month since 2015 to February 2023.

(c)  He made a profit of $150,000 by selling his property.

Background

10.  The Defendant is now 34 years old with a clear record in Hong Kong.  He is a Mainland Chinese, single and lives with his mother.

11.  Before his arrest in the present case, he was an estate agent making $20,000 per month.

12.  The Defendant trusted his acquaintance from Xiaohongshu who claimed that he needed a Hong Kong bank account to handle certain transactions.  He has no knowledge of the predicate offence.

Sentence

13.  The present offence carries a maximum penalty of a fine of 5 million and an imprisonment term of 14 years on indictment.

14.  In the judgement of Hsu Yu Yi [2010] 5 HKLRD 545, the Court stressed that it was fact-specific nature of the offence regarding sentence.  However, it also pointed out that it was the amount of the money involved, rather than the amount of benefit received by a Defendant, is the major sentencing consideration.  Further, the court also said that it was

“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.”

15.  Also in the case of HKSAR v Boma[2012] 2 HKLRD 33, the Court pointed out that given the highly variable circumstances in which the offence might be committed, it was difficult and undesirable to offer guidelines.  However, the Court of Appeal provided a non-exhaustive list of relevant sentencing factors for consideration.

16.  In the present case:-

(a)  The predicate offence is an online fraud.

(b)  There is no direct evidence to suggest that the Defendant was aware of the nature of the predicate offence. However, as stated in HKSAR v Cen Huakuo CACC 21/2014 that “ignorance of the indicatable offence could not be treated as mitigating factor.”

(c)  The role of the Defendant was to open an account and used that account to receive funds from overseas (with USD, Australian and Canadian currency)  and withdraw the funds in Hong Kong, as there were 44 withdrawals. When he was arrested, the ATM card of the account was with him.

(i)  The total deposit was around HK$3,243,496.82.

(ii)  The total amount being withdrawn: HK$3,243,452.

(summary of facts said that: showing a mirror pattern)

(d)  According to the movement record:-

(i)  He entered Hong Kong on 28 August 2023 (the account was opened on that day).

(ii)  He left Hong Kong at the small hours on 29 August 2023.

(that means it was a one day trip and his purpose of the trip to Hong Kong was to open the account )

(iii)  Between September and December 2023, he made 5 days trip to Hong Kong.

(e)  He saw posts on XiaoHongshu and he opened the account.

(f)  Two days after the account was opened, the money-laundering period commenced from 31 August 2023 to 5 October 2023. A total of 5 weeks.

(g)  The amount involved as mentioned previously was about 3.2 million.

(h)  The Defendant was a Mainlander; he came to Hong Kong with one purpose to commit the present offence. I view this as an international element and also an aggravating factor.

(i)  The level of the Defendant’s participation and assisting in this matter is high. Without his assistance in opening the account in Hong Kong that mastermind behind him in China would not be able to benefit from this ill-gotten gain.

17.  As said in many cases, money-laundering offence is a serious offence and must be deterred even for a first time offender, immediate custodial sentence is required[1].

18.  In the case of HKSAR v Wan Kwok Keung [2012] 1 HKLRD 201.  The Court said that:-

“15. the starting point is 3 years or so where the ‘black money” involved is between $1 million and $2 million; 4 years so where it is between $3 million and $6 million; and could be over 5 years where it is above 10 million.”

19.  Considering all the above factors, I come to the conclusion that a starting point of 3 years and 3 months is appropriate.  Given ¹/₃ discount, it comes down to 2 years and 2 months.

Enhancement rate

20.  The Defendant does not oppose to the Prosecution’s application to the enhancement of sentence pursuant to s.27(2)  of the Organized and Serious Crimes Ordinance Cap 455 on the ground that this specified offence was prevalent and the nature and extend of any harm, whether direct or indirect, caused to the community by recent occurrence of this specified offence.

21.  In support of such an application, the Prosecution furnished a statement from Chief Inspector Li, dated 11-25-2024, to this Court with the updated data as to the number of cases in money laundering.

22.  I am satisfied that this specified offence is prevalent and cause harm to the community by recent occurrence:-

(a)  There is a negative impact to the reputation of Hong Kong as a well-known international financial hub.

(b)  Because of the multiple layers of “shields” concealing the identity of the masterminds, making it difficult for the police to identify the mastermind behind the scheme.

(c)  The increasing number of stooge accounts encourage more crimes to be committed as the mastermind could easily get away from being arrested.

(d)  That allow the culprit to make use of their ill-gotten gains to extend their sphere to engage in a wider range of illegal activities.

(e)  People with less awareness of the consequences of selling their bank accounts are more likely to fall prey to the traps set up by the culprit to surrender their account for reward.

23.  To this end, I consider that ¹/₃ as the enhancement rate is sufficient to reflect the prevalence of this specified offence[2].

24.  The formula of the sentence is as follow:-

(a)  The sentence is 2 year and 2 months (26 months)  after ¹/₃ discount.

(b)  Enhance by ¹/₃, that means an additional 8.6 months (24 x ¹/₃), I round down to 8 months.

(c)  The total sentence is 2 years and 10 months