HKSAR v. CHU KIN KEUNG

DCCC 320/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 320 OF 2014

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REASONS FOR SENTENCE

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1. D1 came before me and was charged with five counts of “Dealing with property known or believed to represent proceeds of an indictable offence” (Charge 1 to 5), contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455.  The charge is also commonly known as “money-laundering”. D2 was jointly charged with D1 for money-laundering in Charge 4 whilst D3 faced a single charge of money laundering in Charge 6.

2. D1 pleaded guilty to all the five money-laundering charges and was duly convicted.  As a result of plea bargaining, the prosecution is contented to leave Charge 4 (as against D2) and Charge 6 in the court file and not to proceed with those charges without the leave of the court.

The facts

3. Briefly stated, the black monies to which the five money laundering charges are related were deposited to three different bank accounts held in the name of D1 and two different bank accounts held in the name of D2 and D3 respectively.

4. According to the summary of facts, which D1 has admitted, between 1 August 2009 and 31 October 2010, monies in a total sum of HK$4,139,892.50 was respectively deposited or transferred into the bank accounts in a sum as referred in Charge 1 to 5 (“Account 1 to 5”).

5. Fund flow analysis of Account 1 to 5 for the relevant period was conducted.  A table of analysis was prepared by the prosecution and now becomes Annex 1 in this Reason for Sentence.

6. In summary, the analysis revealed that:-

(a) Account 1 was opened in Hong Kong & Shanghai Banking Corporation Limited (“HSBC”) on 21 September 2001 by D1;

(b) Account 2 was opened in Hang Seng Bank Limited on 5 June 2009 by D1;

(c) Account 3 was opened in Bank of China Limited on 16 April 2009 by D1;

(d) Account 4 was opened in HSBC on 2 August 2005 by D2;

(e) Account 5 was opened in Hang Seng Bank Limited on 9 March 2010 by D3;

(f) between 1 August 2009 and 31 March 2010, a total of HK$1,052,251 was deposited into Account 1 while HK$1,047,200 was withdrawn during the period;

(g) between 1 August 2009 and 31 March 2010, a total of HK$419,350 was deposited into Account 2 while HK$406,726 was withdrawn during the period;

(h) between 1 June 2009 and 31 November 2010, a total of HK$581,000 was deposited into Account 3 while HK$528,595 was withdrawn during the period;

(i) between 1 January 2010 and 30 June 2010, a total of HK$523,091.50 was deposited into Account 4 while HK$514,038 was withdrawn during the period;

(j) between 9 March 2010 and 31 October 2010, a total of HK$1,564,200 was deposited into Account 5 while HK$1,555,617 was withdrawn during the period;

(k) in each of the accounts, there were numbers of suspicious transactions characterised by records of single/multiple money deposits followed by withdrawals of similar amount of money within a day to several days after the deposit was made; and

(l) the running balance of Account 1 to 5 remained relatively low at all material times.

7. The financial position of D1 is by no means rich.  D1 did not file any tax return with Inland Revenue Department for the financial years 2008 to 2009, to 2010 and 2011.  Land search and company search against D1 showed a negative result between January 2007 and December 2011.

8. On 9 October 2012, D1 was arrested by the police.  After D1 was arrested, he made the following admissions under caution:-

(1) in 2009, he met Ah Yip, who borrowed three bank accounts from him;

(2) he therefore lent Ah Yip the bank accounts for a reward of HK$10,000 per month;

(3) he withdrew money from the bank accounts almost every day as instructed by Ah Yip;

(4) the money would be given to Ah Yip or any other persons instructed by Ah Yip;

(5) he kept the ATM cards of the bank accounts himself;

(6) he borrowed bank accounts from Chan and Hui;

(7) he used Account 4 and Account 5 in the same way he used Account 1 to 3 to “work” for Ah Yip;

(8) he kept the ATM card of Account 4 for Chan; however, he had returned the ATM cards afterwards.

The criminal records and the background of D1

9. D1 is 29 years of age and he is still single.  He had 10 conviction records relating to 12 charges between 2000 and 2007.  He had been sentenced to various orders by the courts, including Probation Order, Detention Centre Order, Community Service Order and imprisonment terms.  His last conviction was in 2007 when he was sentenced to 24 months’ imprisonment for a “Trafficking in dangerous drugs” offence.  He was released from prison on 9 April 2009.

10. According to his counsel, Mr Souyave, the defendant was born and educated in Hong Kong.  His parents separated when he was at the age of 14 and he left school after Form 3.  His mother has passed away due to illness and his father lived apart with him.  D1 resided with his elder brother in a public housing estate in Sha Tin before his arrest. 

11. After his arrest, D1 was released on bail and he has been working as a lorry driver, earning a monthly income of HK$20,000 since then.

12. In mitigation, Mr Souyave basically repeated to the court what D1 had told the police during the investigation of how he came to lend his three bank accounts (Account 1 to 3) and borrowed the two bank accounts (Account 4 to 5) from his girlfriend (D2) and D3 for the purpose of receiving the money deposits and withdrawing the money for the use of Ah Yip for a reward of HK$10,000 per month.

13. Mr Souyave said the offences were committed by D1 not long after his release from prison, at a time when he was still unemployed.  D1 had made it clear from the beginning to Ah Yip that he did not want any trouble and he was assured that everything would be fine.

14. In mitigation, Mr Souyave also stressed the fact that the defendant had pleaded guilty and also fully cooperated with the police. 

15. He urged the court to consider the fact that the predicate offence was unknown in this case and D1 has no actual knowledge of the predicate offence. 

16. He also submitted that but for the frank admission by D1 for his involvements in Charge 4 to 5, there was no evidence against his client.

17. Mr Souyave also relied on the relevant factors as identified by the Court of Appeal in the case Boma Amaso [2012] 2 HKLRD 33 and submitted that for money laundering offence for this present total amount, which is about 4.1 million, the starting point is about 3 years.

18. Finally, Mr Souyave also submitted to court some copies of official receipts issued by UNICEF indicating numerous monthly donations made by D1 for the period between 1 April 2011 and January 2011 in the sum of HK$2,600, and also for the period between April 2013 and March 2014 in the sum of $3,600 respectively.

Sentencing considerations

19. In the past few years, the Court of Appeal has stated the relevant factors for sentencing money laundering cases.  In Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201, a Chinese judgment, Yeung JA (as he then was) held that:-

“12. ‘Money laundering’ is a serious offence for not only does it encourage criminal activities indirectly, but also attempt to legitimatise the proceeds of the crime. In order to crack down on serious crimes” and “to prevent offenders from getting financial gains, it is necessary to deter and prevent the offenders from financial gains. It is necessary to deter the commission of the money laundering offence.

13. Generally, the sentence for a ‘money laundering’ offence should mainly reflect the amount of the ‘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’ is in fact derived. Of course if there is information to prove that the ‘black money’ originated from a serious crime, including drug trafficking, kidnap and blackmail, illegal human trafficking and other organised crimes, etc, or the defendant’s benefit is huge, then the sentence should be adjusted upward.

14. This Court has, in a number of other similar cases, also listed other factors relevant to the sentence to be imposed, including the number of offence, the length of the time the offence lasted, the degree to which the defendant participated in the offence involving the ‘black money’ and whether or not it was an organised and sophisticated crime”.

20. In HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, the Court of Appeal has referred to the amounts of money involved in the sentences imposed in a number of money laundering cases in the past.  Cheung JA analysed the case results and concluded that the starting point is 3 years or so when the black money involved is between HK$1 million and HK$2 million; 4 years or so when it is between HK$3 million and HK$6 million.

21. In Boma Amaso (supra), Stock VP had said that the question of the amount of the money laundered is not the be-all and end-all of a case, but is a significant feature.  His Lordship has also elaborated on the other relevant factors to be considered when a court is tasked to consider the sentence for money laundering offence. 

22. Those other significant features include, inter alia, (at paragraph 40):-

(a) the nature of predicate offence;

(b) the state of the offender’s knowledge;

(c) where the operation involved an international dimension, this would be a significant aggravating feature;

(d) the sophistication of the offence, including the degree of planning;

(e) where the offence was committed by or on behalf of an organised criminal syndicate would be an aggravating feature;

(f) whether there was one transaction or many and the length of the time over which the offence was committed;

(g) whether the offender continued to launder funds after he had discovered the nature of the funds were proceeds of an offence or a serious offence was involved; and

(h) the role of the offender and the acts performed by him.

The list was said to be non-exhaustive.

23. In the present case, the nature of the predicate offence is still unknown. 

24. There were a certain degree of planning and sophistication involved in the money laundering operation.  Ah Yip and D1 had together made use of five different bank accounts in three local banks to receive and to facilitate the withdrawal and transfer of the black monies. 

25. There were altogether a total deposit of $4,139,892.50 and a total withdrawal of HK$4,052,176 in respect of the Account 1 to 5 in a long period of 15 months.

26. I of course take into account that it was a common ground between both the prosecution and the defence that there was no evidence that D1 knew the nature of the predicate offence.  However, that does not mean that his culpability can be thereby significantly reduced, although I bear in mind that D1 is to be sentenced on the facts of the money laundering charges only.

27. As commented by Stock VP in Boma, (at paragraph 40(2)(a)):-

“In such a case it must be recognised that he is nevertheless ‘assisting in the original crime, whether with knowledge or blind eye knowledge of it’: R v Basra at p 472. The scheme and the purpose of the legislation is to ensure care and honesty in the handling of other people’s money and those who are prepared to handle money on other people’s behalf and turn a blind eye to the source of that money do so at their own risk: see R v Farrow [2007] 1 Cr App R (S) 558, para 24. So the person who is aware of the fact that he is dealing with proceeds of an indictable offence but deliberately chooses not to ask questions is barely less culpable than the person who asks or who is told.”

28. I found D1 was exactly such a person.

29. The total money laundered in Charge 1 to 5 is said to be approximately HK$4.1 million.  As said, the usual starting point is within the range of 4 years’ imprisonment or so, if one simply refers to the amount of the black money according to Hsu Yu Yi (supra).

30. Mr Souyave has submitted in his mitigation the role played by D1 was akin to a petty crook further down in the chain of culpability who was paid a small sum to open an account and the overall starting point should perhaps be 3 years, after taking into account of the lack of international dimension and other aggravating features of the case.

31. I disagree.  Although there is no direct proof as to the source of the money deposited into Account 1 to 5, it is not important.  In Wan Kwok Keung, the Court of Appeal expressly observed that in most money laundering cases there may not be evidence to even show from what indictable offence the black money is, in fact, derived.  It is not uncommon in many money laundering cases that the nature of the predicate offence is unknown.  Generally, the sentence for a money laundering should mainly reflect the amount of the black money laundered, so it does not matter whether it is known to the court the origin of the black money.

32. The role played by D1 in this case is also pivotal.  Without the participation of people like him, it is difficult for the criminals behind to open any bank account in order to receive the black money and withdraw and transfer the black money without detection. 

33. D1 also did not just open the bank accounts and hand over the operation to Ah Yip.  He had also assisted in the actual withdrawing and transferring of the monies received into these accounts and he had also enlisted the assistance by his girlfriend (D2) and his friend (D3) to use their own accounts in a similar way.  In return, D1 received a monthly reward of $10,000 for all the bank accounts. 

34. Therefore, he should be pretty clear that he was not dealing with ordinary bank accounts.  Despite the assurance by Ah Yip, D1 was effectively turning a blind eye to the reality and willingly lent himself, his accounts and his friends’ accounts to be used by the criminals behind.

35. Having considered the above authorities and also applying the other relevant factors into consideration, I come to the conclusion that the overall notional proper starting point should be one of 4 years’ imprisonment.

36. I will not further discount the sentence just because D1 had made some donations to charity in the past.  Without in any way detracting from the value of charitable works carried out by UNICEF, in my mind, the contributions made by D1 paled into insignificance when it was contrasted with the offences with which he has been convicted. 

37. D1 pleaded guilty to all the charges and for which he would be given the usual full one-third discount.

38. The only effective mitigation in addition to the usual discount is, of course, D1’s voluntary confessions to Charge 4 to 5.

39. The prosecution had conceded that but for his confessions, there would be no evidence against D1 in those two charges.

40. I will therefore reduce the overall sentence by 4 months.

41. Based on the above reasons, the overall sentence in respect of all five charges should be 28 months’ imprisonment.

42. However, all these five charges involves different amount of black money, and I think it is only right that I should impose an individual sentence on each charge rather than just a overall concurrent sentence.  I shall also fix an individual sentence for each charge in order to reflect the amount involved in each charge.

43. I already said that the final sentence should be 28 months’ imprisonment.  In order to achieve this result, firstly, I fix the starting point for each charge as follows, according to the sums of money involved:-

(1) Charge 1: 36 months;

(2) Charge 2: 18 months;

(3) Charge 3: 21 months;

(4) Charge 4: 21 months;

(5) Charge 5: 42 months.

44. I shall give the usual one-third discount on account of plea in respect of Charge 1 to 3. 

45. I shall give additional discount of 2 months and 4 months in addition to the usual one-third discount on Charge 4 to 5 to reflect D1’s voluntary confession to these two charges. 

46. After deductions, the resulting sentence on Charge 1 to 5 is now as follows:-

(1) Charge 1: 24 months;

(2) Charge 2: 12 months;

(3) Charge 3: 14 months;

(4) Charge 4: 12 months;

(5) Charge 5: 24 months.

47. I order that:-

(1) the sentences on Charge 1 and Charge 5 each to run concurrently;

(2) the sentences on Charge 2 to 4 also to run concurrently, but out of which 4 months is to run consecutively to the sentences on Charge 1 and Charge 5.

Total sentence

48. The total sentence, as I have already said, is 28 months’ imprisonment.

Annex 1

Table for reference (DCCC 320/2014)