HKSAR v. CHUNG YAM SHING AND OTHERS

DCCC 490 & 1249/2024

(Consolidated)

[2025] HKDC 486

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASES NOS. 490 AND 1249 OF 2024 (CONSOLIDATED)

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REASONS FOR SENTENCE

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D1 to D3 each pleaded guilty to a "Money laundering" offence (Charges 1 to 3 respectively). In gist, their personal bank accounts each received money transferred from the bank account of a phone scam victim.

Summary of Facts

The predicate offence (phone deception)

2.  About 9:00 a.m. on 6 April 2020, Madam Woo (PW1; aged 83)  received a call made to her home landline from a Putonghua-speaking male (Male 1).  Claiming to be a mainland police officer, Male 1 told PW1 that she was wanted by the mainland Police for a financial case.  He asked PW1 for her HKID card number, Home Return Permit number, phone number and residential address.  PW1 disclosed the same to Male 1.

3.  About 4:00 p.m. on 9 April 2020, another Putonghua-speaking male (Male 2)  called PW1's mobile phone number claiming to be Male 1's supervisor.  Male 2 told PW1 that he would help her investigate the case and prove her innocence.  He asked PW1 for all her bank accounts numbers.  PW1 disclosed the same to Male 2.

4.  About 9:00 a.m. on 16 April 2020, Male 2 called PW1's mobile phone number again telling her that someone named Xiao-lin would collect the U-Key and password of PW1's bank account at her home 2 days later for investigation.  PW1 agreed.  In the same evening, PW1 checked the balance of her account with China Minsheng Bank (CMB Account), which was US$949,247.65.

5.  About 11:00 a.m. on 17 April 2020, a Chinese male (Male 3)  went to PW1's home claiming to be Xiao-lin. PW1 handed over the U-Key and password of the CMB Account to him.  Male 3 said nothing and left.

6.  On 1 June 2020, PW1 checked her CMB Account and discovered 15 transactions not authorized by her.  She tried to call Male 2 but was unable to reach him.  The Police was alerted.  It was later confirmed that the CMB Account had a total of 16 unauthorized transactions.  PW1 lost a total sum of HK$8,740,900.

Money laundering

7.  Police investigation discovered that of the 16 unauthorized transactions, some money in the CMB Account were remitted to the respective bank accounts of D1 to D3 with the following details :-

(a)  a sum of HK$1,500,000 was remitted to a Bank of China Account[1] (D1's Account)  on 20 April 2020;

(b)  a sum of HK$2,000,000 and a sum of HK$1,000,000 were remitted to a CMB Wing Lung Account[2] (D2's Account)  respectively on 20 and 26 April 2020; and

(c)  a sum of HK$393,600 was remitted to a Standard Chartered Bank Account[3] (D3's Account)  on 6 May 2020.

D1's Account

8.  D1's Account was opened by D1 on 26 September 2006.

9.  Between 8 July 2019 and 24 April 2020, D1's Account received a total of 57 deposits, which aggregated to a sum of HK$4,816,157.57.  A total of 115 withdrawals were made, which aggregated to a sum of HK$4,815,721.67.  Of the 115 withdrawals, 63 were made in cash, which aggregated to a sum of HK$4,601,132.18.  Between 1 January and 24 April 2020 (the offence period of Charge 1), a total of 23 deposits were received, which aggregated to a sum of HK$4,590,802.18.

10.  Based on the timing and amount of the deposits and withdrawals, the Police found a "mirror transaction pattern".

D2's Account

11.  D2's Account was opened by D2 on 23 March 2020.

12.  Between 30 March and 18 May 2020 (the offence period of Charge 2), D2's Account received a total of 34 deposits, which aggregated to a sum of HK$11,806,158.99.  A total of 100 withdrawals were made, which aggregated to a sum of HK$11,806,062.41.  Of the 100 withdrawals, 98 were made by FPS, which aggregated to a sum of HK$11,329,369.80.

13.  Based on the timing and amount of the deposits and withdrawals, the Police found a "mirror transaction pattern".

D3's Account

14.  D3's Account was opened by D3 on 27 March 2020.

15.  Between 27 March and 18 June 2020 (the offence period of Charge 3), D3's Account received a total of 30 deposits, which aggregated to a sum of US$194,698.57 and a sum of HK$2,132,417.58.  A total of 62 withdrawals were made, which aggregated to a sum of US$159,955.88 and a sum of HK$2,132,528.23.

16.  Based on the timing and amount of the deposits and withdrawals, the Police found a "mirror transaction pattern".

Inland Revenue Records

17.  IRD records showed that for the financial year 2020/21, D1's annual salary was HK$16,000; D2's was HK$2,178; and D3 received HK$132,000 in fees as a sub-contractor.

Arrest and admissions

18.  The Police arrested D1 to D3 respectively on 20 June, 22 June and 20 July 2022 for "Fraud" or "Deception".

19.  In his video recorded interview, D1 claimed that on 23 December 2021, he started working as a restaurant manager earning $19,200 per month.  His income was from his salary only.  He admitted having sold D1's Account to an unknown person in January or February 2020 for $1,000 due to financial difficulties.  He gave the ATM card, the ATM card's password and the online banking password to that person.  D1 did not keep the monthly statements of D1's Account after he had sold it. Regarding the deposits made to D1's Account from 8 July 2019 to January/February 2020, D1 claimed that he was not sure since he had lost the ATM card for a while.  A replacement card was issued to him.

20.  In his video recorded interview, D2 claimed that from 6 April to 6 May 2020, he was a waiter earning a daily wage of $500.  His income was from his salary.  He admitted that he was in financial difficulties when he opened D2's Account in 2020.  A person surnamed So suggested D2 to sell his bank account.  He then gave the ATM card to So in return for a reward of $1,000.  D2 claimed that the phone number and email address contained in the opening mandate were not his.  So gave that phone number to D2 and told him to put it on the bank form.

21.  In his video recorded interview, D3 claimed that from 6 April to 6 May 2020, he was a self-employed truck driver earning about $15,000 per month.  His source of income was his salary.  D3 confirmed that D3's Account belonged to him and he had used it.  He said he was unsure if there were other people using that bank account.

Mitigation

D1

22.  He is 37 and has a clear record.  His counsel Mr. Leung informed me that D1 is separated and has a daughter (aged 8)  who resides with his wife.  D1 now works as a construction site supervisor earning about $21,000 per month.

23.  In mitigation, Mr. Leung submitted that D1 sold his bank account for $1,000 in 2020 owing to financial difficulties.  At that time, D1 often quarrelled with his wife over financial matters.  Since he always puts his family first, he has incurred heavy debts from credit cards and financial companies.  Unfortunately, he was unable to save his marriage.  In August 2024, D1 attempted to commit suicide but was saved.

D2

24.  He is 42 and has a clear record.  His counsel Mr. Lam informed me that D2 is divorced.  He resides with his father and younger brother in a public housing unit in Tung Chung.  D2 has been working mainly in the restaurant and catering business.

25.  In mitigation, Mr. Lam submitted that in late 2019, D2 lost his job as a warehouse attendant.  Around the same time, D2's father asked him to move out of the Tung Chung flat because D2's father intended to re-marry.  D2 ended up moving into a cubicle in Tsim Sha Tsui paying a weekly rent.  As D2 was desperate for money, he accepted So's offer to sell his bank account.  In early May 2020, D2 received his bank statement and realized the magnitude of the transactions involved in D2's Account.  He closed the account on 18 May 2020.

D3

26.  He is 43 and has 5 conviction records (none were related to "Money laundering").  His last conviction is dated April 2023, meaning it took place after the present case.  His counsel Mr. Kwan informed me that D3 is divorced with 2 children who do not reside with him.  He was a causal worker earning about $15,000 per month.  He paid maintenance for his children each month regularly.

27.  In mitigation, Mr. Kwan submitted that D3 merely lent his bank account to a friend and received no remuneration for doing so.

Sentence

28.  The prosecution has applied for an enhanced sentence pursuant to section 27(2)(c)  and (d)  of the Organized and Serious Crimes Ordinance (Cap.455)  on the basis of prevalence as well as the nature and extent of harm caused to the community.

29.  I bear in mind the Court of Appeal's decision in HKSAR v Xu Mai Qing CACC 464/2005, whereas Yeung JA (as he then was)  held "Under section 27(11)  of OSCO, what the prosecution has to prove is the prevalence of the offence, not the increase in the number of such offences[4]."

30. I have read the witness statement of CIP Li dated 5 February 2025. I am satisfied that in 2020, money laundering cases were prevalent in Hong Kong in terms of the number of cases as well as the total value of monetary loss.

31. There is clear and cogent evidence before me that money laundering by bank accounts opened by "ML Stooges" is still widespread and commonly being practised in Hong Kong today. What true criminals need are gullible scapegoats like D1 to D3 in the present case who would take the blame for them when the law enforcement takes action. The court must send a clear message to the general public that people who play the role of "ML Stooge" will receive severe punishment, so that there is a deterrent effect. When there are fewer or no willing "ML Stooges", the criminal activities which rely on their bank accounts would fail.

32. This is a typical case of money laundering by way of a stooge bank account. D1 to D3 all claimed complete ignorance of the phone deception against PW1; however, the scam would have been meaningless without D1 to D3's bank accounts. Assuming what they said is true, given their roles, the total sums which went through the 3 bank accounts and the overall circumstances, I grant the prosecution's application and will enhance the sentence by 25%.

33. The Court of Appeal in SJ v Wan Kwok Keung [2012] 1 HKLRD 201 held :-

Generally, the sentence for "money laundering" offences 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.[5]

34. In determining the proper starting point, I have reminded myself of the sentencing principles laid down in HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545 and HKSAR v Boma Amaso [2012] 2 HKLRD 33. I have also borne in mind the amounts of money involved, the duration of each offence, each defendant's role in relation to the movements of funds as well as his personal circumstances.

35. In SJ v Ngai Fung Sin Apple [2013] 5 HKLRD 104, Yeung V-P held :-

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…[6]

D1

36. I accept there is no evidence in the present case showing that: (i)  except the HK$1,500,000 from PW1, the funds received by D1's Account were related to any predicate offence; and (ii)  either D1 was involved in or had any knowledge of any predicate offence. As the sole owner of D1's Account, D1 should have retained its ultimate control and paid attention to its transactions on a regular basis. These were his duties and he has neglected them.

37. On the other hand, I cannot overlook the fact that almost HK$4.6 million went through D1's Account within a period of almost 4 months. By giving his bank account to someone and thus allowing funds of unknown origins to pass through D1's Account, D1 played a pivotal role in helping the mastermind(s)  of criminal activities to access their illegal funds without revealing their identities.

38. In the circumstances, I adopt a starting point of 4 years' imprisonment[7]. With the timely guilty plea, the sentence becomes 32 months. Apart from this, I see no other mitigating factors which warrant any further reduction. With the 25% enhancement, I sentence D1 to 40 months' imprisonment for Charge 1.

D2

39. I accept there is no evidence in the present case showing that: (i)  except a total of HK$3,000,000 from PW1, the funds received by D2's Account were related to any predicate offence; and (ii)  either D2 was involved in or had any knowledge of any predicate offence. As the sole owner of D2's Account, D2 should have retained its ultimate control and paid attention to its transactions on a regular basis. These were his duties and he has neglected them.

40. On the other hand, I cannot overlook the fact that HK$11.8 million went through D2's Account within a period of almost 2 months. By

giving his bank account to someone and thus allowing funds of unknown origins to pass through D2's Account, D2 played a pivotal role in helping the mastermind(s)  of criminal activities to access their illegal funds without revealing their identities.

41. In the circumstances, I adopt a starting point of 5 years' imprisonment[8]. With the timely guilty plea, the sentence becomes 40 months. Apart from this, I see no other mitigating factors which warrant any further reduction. With the 25% enhancement, I sentence D2 to 50 months' imprisonment for Charge 2.

D3

42. I accept there is no evidence in the present case showing that: (i)  except the HK$393,600 from PW1, the funds received by D3's Account were related to any predicate offence; and (ii)  either D3 was involved in or had any knowledge of any predicate offence. As the sole owner of D3's Account, D3 should have retained its ultimate control and paid attention to its transactions on a regular basis. These were his duties and he has neglected them.
43. On the other hand, I cannot overlook the fact that HK$2.1 million and almost US$200,000 (i.e. approximately HK$3.65 million[9] in total)  went through D3's Account within a period of almost 3 months. By giving his bank account to someone and thus allowing funds of unknown origins to pass through D3's Account, D3 played a pivotal role in helping the mastermind(s)  of criminal activities to access their illegal funds without revealing their identities.

44. In the circumstances, I adopt a starting point of 4 years' imprisonment[10]. With the timely guilty plea, the sentence becomes 32 months. Apart from this, I see no other mitigating factors which warrant any further reduction. With the 25% enhancement, I sentence D3 to 40 months' imprisonment for Charge 3.