HKSAR v. CHIU WAI CHUNG

DCCC 248/2024

[2025] HKDC 1606

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 248 OF 2024

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REASONS FOR SENTENCE

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1.  Mr Chiu pleaded guilty before me 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, Cap 455.

2.  Particulars are that he, between 18 October 2021 and 30 May 2022, in Hong Kong, together with persons known as “Mr A” and “Mr B”, knowing or having reasonable grounds to believe that property, namely a chose in action in a total sum of E9,100 Euro currency, $367.028.86 United States currency and $10,781.19 Hong Kong currency in the account numbered 4870019361 held under the name of Kingko Management Limited with Dah Sing Bank, Limited, in whole or in part directly or indirectly represented any person’s proceeds of an indictable offence, dealt with the said property.

Facts admitted by Mr Chiu

3.  In March 2022, police received a report that an overseas victim was deceived by investment scam to remit monies to various bank accounts including a Dah Sing Bank, Limited (“DSB”), account no 4870019361 (“DSB Account”).

4.  The DSB Account was held under the name of a Hong Kong company called Kingko Management Limited (“Kingko”).

5.  Kingko was incorporated in Hong Kong on 21 June 2021.  On 14 July 2021, the DSB Account was opened.

6.  On 1 September 2021, Mr Chiu became Kingko’s sole director and shareholder.  On 18 October 2021, he, as Kingko’s director, became DSB Account’s sole signatory.

7.  The DSB Account contained a EUR account, a USD account, and a HKD account.

8.  On 7 March 2022, a sum of Euro 9,100 was deposited from a source outside Hong Kong into the EUR account and was transferred to the USD account on the same day in the sum of USD 9,818.70.  No other transactions were recorded in the EUR account.

9.  For the USD account, it was dormant between 18 October 2021 and 17 February 2022.  However, between 18 February 2022 and 30 May 2022:

(a) There were a total of 11 deposits totaling USD376,847.57 (including the aforesaid intra-account transfer from the EUR account); around 86% of such deposits originated from outside Hong Kong;

(b) During the same period, all the monies in the USD account were withdrawn in a total of 11 transactions (including two intra-account transfers to the HKD account in the respective sums of HKD 1,561.90 and HKD 2,779.61); over 99% of the deposits were withdrawn either on the same day or shortly thereafter;

(c) Excluding the aforesaid intra-account transfer from the EUR account and interest (USD 0.01), the total deposits received during the period were USD 367,028.86; and

(d) On the day when the DSB Account was closed ie 30 May 2022, there was originally a balance of USD354.61; by Mr Chiu’s instructions, this remaining sum was transferred to the HKD account in the sum of HKD 2,779.61 on the same day.

10.  For the HKD account, between 18 October 2021 and 30 May 2022:

(a) There were a total of 9 deposits totaling HKD 15,122.72 (including the aforesaid two intra-account transfers from the USD account); around 56% of the deposits (HKD 8,560.80); were deposited on the day when the DSB Account was closed (30 May 2022);

(b) During the same period, all the monies in the HKD account were withdrawn in a total of 5 transactions; immediately before the DSB Account was closed, there was a remaining balance of HKD 14,067.72, which were all withdrawn by Mr Chiu in cash before account closure; and

(c) Excluding the aforesaid two intra-account transfers from the USD account and interest (HKD 0.02), the total deposits received during the period were HKD 10,781.19.

11.  There were observable patterns of money laundering in the DSB Account, namely mirror pattern, quick speed of dissipation of funds and low remaining balance.  The DSB Account was being used as a temporary fund depository.

12.  On 21 February 2023, the police arrested Mr Chiu.  During a cautioned VRI, Mr Chiu stated:

(a) He received education up to university level; he was unemployed between 2020 and January 2023; he lived in public housing with his family;

(b) In 2021, he was in financial difficulties; he received a cold call which referred him to a man known as Mr A; Mr A told him to use his name to incorporate a company and open a bank account for Mr A’s trading business; Mr Chiu could receive 1% of every transaction as service fees; he never met Mr A and they mainly communicated via WeChat;

(c) Thereafter, following Mr A’s instructions, he went to an office in Tuen Mun to sign some documents for the transfer of Kingko’s ownership to him; a few days later, he went to a DSB branch for the transfer of the DSB Account to him;

(d) Thereafter, Mr A asked him to meet a man known as Mr B in Yuen Long MTR station; when they met, he gave Mr B all relevant documents including Kingko’s company chop;

(e) He received email notifications for the transactions in the DSB Account but he did not pay attention to them;

(f) He had no idea as to the monies transferred to the DSB Account; he never operated the account; and

(g) Later, DSB staff informed him that the DSB Account was cancelled due to some internal reasons; there was around HKD 10,000 plus left in the account; the bank staff returned the remaining balance to Mr Chiu; as he could no longer contact Mr A, he spent all the money himself.

13.  Kingko has not filed any tax return.

14.  The total amount in the charge in HKD terms is about HKD2.95 million.

Criminal record

15.  Mr Chiu has a clear record.

Antecedents

16.  Mr Chiu is aged 35 (31-32 at the time of the offence), educated to University level, unemployed at the time of arrest.  He lives with his family in public housing in Tuen Mun.

Mitigation

17.  Mr Yeung Wan Fung of solicitor mitigated on behalf of Mr Chiu.  The following is a summary of the mitigation submissions.

18.  Mr Chiu was born in Guangzhou and moved to Hong Kong at the age of 2. He grew up in a single-parent family and lives with his mother and younger brother.

19.  In 2014, Mr Chiu graduated with a BA in Marketing and Public Relations from SPEED of HK Polytechnic University.  After graduation, he worked in various capacities but in August 2020, he ceased to be employed and devoted himself to financial investment and trading for several months but suffered losses and incurred debts.  He started job hunting again in around May 2021.

20.  After the events of the present case, he secured new employment in July 2023 as an Export Sales Executive at Kang Shi Fu also known as Master Kong, earning an average monthly salary of $28,000.  He recently resigned in anticipation of imprisonment for the present case.

21.  The public housing unit in which Mr Chiu resides with his mother (63) and younger brother (unemployed) is now under the ownership of his mother through a special government scheme.

22.  Ever since Mr Chiu’s mother had a work-related accident in or around 2013, she has had some stress-related medical issue (medical records submitted) which limited her work capacity to occasional part-time employment only.  Mr Chiu therefore bears primary responsibility towards household expense.

23.  The events leading to Mr Chiu’s commission of the offence are narrated in his VRI a summary of which is contained in the Amended Summary of Facts.

24.  Despite the initial promise of a 1% service fee, Mr A severed contact and Mr Chiu received no remuneration at all.  Mr Chiu accepts responsibility for his naivety and failure to monitor the bank account.  Mr Chiu cooperated fully at an early stage.  He pleaded guilty at the earliest possible opportunity.

25.  Persons convicted of money laundering, even for first offenders, are generally sentenced to immediate prison terms.  There is no sentencing tariff.

26.  It has been held that the sentence should mainly reflect the amount of money laundered.  In HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, Cheung JA set out the amounts of money involved and the sentences passed in a number of money laundering cases: the starting point was 3 years or so where the ‘black money’ was between $1 million and $2 million; 4 years or so where it was between $3 million and $6 million; and could be over 5 years where it was above $10 million.

27.  In Boma Amaso [2012] 1 HKC 504, Stock VP (as Stock NPJ then was) explained that given the highly variable circumstances in which the offence of money laundering might be committed, it was difficult and undesirable to offer a sentencing tariff.  His Lordship explained that deterrence was paramount given the encouragement.  Other than the amount of money, his Lordship listed other significant considerations that could be taken into account, including (but not exhaustive):-

(a) The nature of the predicate offence;

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

(c) Whether the operation involved an international dimension;

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

(e) Whether the offence was committed by or on behalf of an organized criminal syndicate;

(f) Whether there was one transaction or many in the length of 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.

28.  In HKSAR v Leung Wai Wah CACC 201/2011, the Court confirmed where there are circumstances that justify taking a lenient approach, the means by which this should be achieved is by reducing the starting point that would otherwise be appropriate for the gravity of the offending.

29.  Mr Yeung referred to a District Court sentencing case HKSAR v Lau Hiu Tung (transliteration) DCCC 1061/2024 [2025] HKDC 1442 for reference only.

30.  Mr Chiu’s culpability lies in his failure to exercise proper judgement and in his having turned a blind eye to the suspicious features of the arrangement.  When asked, Mr Yeung concedes that Mr Chiu had reasonable grounds to believe the relevant property represented proceeds of an indictable offence.

31.  Mr Yeung submitted that Mr Chiu had no role in carrying out or facilitating any of the transactions beyond allowing his bank account to be used.

32.  Mr Chiu has no objection to the prosecution’s furnishing of information and request for enhanced sentencing under OSCO, Cap 455.

33.  Mr Yueng asked the court to be lenient to Mr Chiu.

34.  Mr Yeung submitted on behalf of Mr Chiu two mitigation letters written in Chinese respectively by Mr Chiu himself and his younger brother.  Mr Yeung also submitted a mitigation letter written in English by Vice President, Head of Export of Master Kong, and with it a name card copy and a Certificate of Employment issued by Master Kong in favour of Mr Chiu, all in English.  The contents are generally that Mr Chiu apologizes to the court and admits his negligence and mistake; that during the period prior to the hearing, he did not give himself up and worked hard at Master Kong; that Mr Chiu promises never to re-offend; that Mr Chiu is the main breadwinner; that Mr Chiu while working at Master Kong has demonstrated himself to be an honest, responsible, upright and kind individual; that his efficiency, passion and high capability have made him an invaluable asset to Master Kong; that Master Kong is willing to re-employ Mr Chiu upon his release from prison.  The letter writers all asked for a lenient sentence for Mr Chiu.

Sentence

35.  Money laundering is a serious offence and helps feed the happening of the predicate offence(s).  As such, deterrent sentences are rightly called for.

36.  In this case, I note the following significant features.  The money laundered came to a total of just under HK$3 million.  The offence spanned about 7 ½ months.  During the period, there were 20 or so deposits and a slightly smaller number of withdrawals.  There was an international dimension. The predicate offence appears to be fraud but there is little evidence to show that Mr Chiu knew about this.  Although 1% of transaction amount was promised, there is no evidence that it was ever paid to Mr Chiu.

37.  Before I decide on the starting point of sentence, I have taken into account all the positive things that have been said about Mr Chiu.  All things considered, I will adopt a starting point of 2 years 9 months’ imprisonment.

38.  Mr Chiu pleaded guilty in good time earning for himself the customary 1/3 sentencing discount.  There are no other mitigating factors of weight to warrant another sentence reduction.

39.  Prosecution furnished under section 27(2) of OSCO, Cap 455, a witness statement of CIP Li Yiu Nam dated 25 August 2025 without objection from defence, with a view to showing the prevalence of money laundering offence, and the nature and extent of any harm, whether direct or indirect, caused to the community by recent occurrences of money laundering offence.

40.  I have received this witness statement.

41.  In Table A on page 5 of the statement, it can be seen the number of money laundering stooges arrested kept increasing to a peak in year 2024 with a figure of 7,883.  For the first 7 months of 2025, the corresponding figure is 3,147.  Projected for the whole of 2025, the figure would be 5,394.  That represents a drop from the year 2024.  Nonetheless, it is still a significant figure.

42.  I am satisfied that the use of money laundering stooges is still prevalent and by implication the offence of money laundering is still prevalent.

43.  In Table B on pages 6 and 7 of the statement, it can be seen that the amount of losses reported by victims of (local) deception cases with money laundering element rose from $552M in 2020 to $2,143M in 2024 and is projected to reach $2,535M by the end of 2025.

44.  Also from Table B, it can be seen that although it may represent a 75% drop from the corresponding figure in 2024, the projected figure for the whole of year 2025 of total amount of reported monetary losses (both local and overseas victims) and laundered proceeds where there was use of stooge accounts still came to $1,122M (projected number of cases being 984).

45.  The harm caused to the community is not restricted to the amount of losses suffered by local deception victims, but also by the increasing use of stooge accounts in the following ways as described in para 18 on pages 5 and 6 of the statement:-

(a) It interferes with the normal operation of the banking system, having a negative effect on the reputation of Hong Kong as a well-known international financial hub;

(b) It forms multiple layers of “shields” concealing the identity of the masterminds behind, making it difficult, if not impossible, for police to identify the masterminds behind;

(c) It substantially facilitates the commission of crimes and in turns leads to more crimes being committed, as the mastermind could easily get away from their criminal liability;

(d) It makes money laundering easier, which allows culprits to make use of their ill-gotten gains to extend their sphere to engage in a wider range of illegal activities;

(e) It means that law enforcement agencies have to put in more investigation efforts and resources; and

(f) People with low income or less awareness of the consequences of selling their bank accounts are more likely to be lured by the culprits to take the risks of commission of crimes to surrender their accounts for monetary reward.

46.  I am satisfied that the harm caused to the community by recent occurrences of money laundering offence is still substantial.

47.  Accordingly, I have come to the view that I am able to exercise the power under section 27(11) of OSCO, Cap 455, to enhance the sentence of Mr Chiu.  Given the trend of the statistics, I have determined that an enhancement of 20% is sufficient in all the circumstances.

48.  I will discard any decimal places in the calculation of the prison term in terms of months.

(Mr Chiu, please stand)

49.  The sentence is 26 months’ imprisonment.