SECRETARY FOR JUSTICE v. LAU MAN YING

[English Translation – 英譯本]
CAAR 6/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

APPLICATION FOR REVIEW NO. 6 OF 2011

(ON APPEAL FROM DCCC NO. 105 OF 2011)

________________

REASONS FOR JUDGMENT

Hon Yeung VP (giving the reasons for judgment of the Court):

Introduction

1. The respondent (LAU Man-ying) pleaded not guilty before Deputy District Judge Johnny Chan to one count of Dealing with Property Known or Reasonably Believed to Represent Proceeds of an Indictable Offence, which is commonly known as the offence of “money laundering”.

2. On 31 May 2011, the respondent was convicted after trial and on 17 June 2011 was sentenced to 18 months’ imprisonment, suspended for two years.

3. The Secretary for Justice (“Secretary”) considered that the sentence was excessively lenient, so he applied to this Court under section 81A of the Criminal Procedure Ordinance for a review of the sentence.  After hearing, we granted the Secretary’s application and resentenced the respondent to immediate imprisonment for four years.  The following are our reasons for judgment.

Facts

4. At the material times, the respondent had three bank accounts under her name: (1) an account with the Nanyang Commercial Bank, 043-490-1-022699-7 (“NCB account”); (2) an account with the Standard Chartered Bank 338-2-095124-4 (“SC account”); and (3) an account with the Bank of Communications, 02756193051981 (“BC account”). Within the same time frame, the applicant [sic] was authorized to deal with an account, which was under Wang Li-zhen’s name, with the Bank of China, 012-695-1-004511-6 (“Wang’s account”) and an account under Wu Shao-bing’s name with the Bank of China, 012-917-1-006044-0 (“Wu’s account”).

5. Between 21 October 2005 and 7 January 2006, 446 sums were paid into the NCB account, involving a total of nearly $270,000,000.  Between 21 October and 1 November 2005, 147 sums were paid into Wang’s account, involving a total of nearly $30,000,000.  Between 21 October and 19 November 2005, 178 sums were paid into Wu’s account, involving a total of about $115,000,000.  Between 21 October 2005 and 9 April 2008, 144 sums were paid into the SC account, involving a total of about $85,000,000; and between 28 November 2005 and 26 June 2008, 280 sums were paid into the BC account, involving a total of nearly $30,000,000.

6. The records of these accounts showed that as soon as or soon after a sum was paid into one of these accounts, an identical sum or a sum of a similar amount was transferred to other bank accounts.

7. On 21 October 2005, the respondent registered with the Police Force as a remittance agent operating a remittance business.  According to section 24C of the Organized and Serious Crimes Ordinance, remittance agents and money changers are required to verify the identities of their clients and make records in respect of transactions which are $8,000 or more in value.  Anyone who fails to do so is liable to a maximum fine of $100,000 and imprisonment for three months.

8. At the time of her registration as a remittance agent, the respondent told the police that she would use the NCB account and Wu’s account to operate her remittance business. On 6 February 2007, the respondent informed the police that Wu’s account was closed and that she had changed to use the SC account to operate her business. She also said that she was carrying on her business by bringing cheques to and from Hong Kong and the Mainland.

9. On 16 May 2008, the respondent further informed the police that the bank account she used for her business was changed to the BC account.

10. When the respondent was put under arrest, she claimed that someone asked her to operate Wang’s account.  She said that originally Wang’s account was used for garment business, but that two months later a person called Ah Tong was allowed to use it for remittance business and that starting from December 2004, she withdrew $5,000 from Wang’s account every month as her reward for assisting Ah Tong in operating the account.

11. The respondent stated that she had already stopped running her remittance business in 2005 and that the deposits, withdrawals and transfers concerning the accounts involved in this case were done by her as instructed by Ah Tong.  She also admitted that she did not make any record about the transactions.

12. When the respondent testified in her own defence, she agreed on the one hand that she did deal with the deposits and withdrawals of the money in the above-mentioned five accounts, but at the same time she protested that she did not have any reasonable ground to believe that the money paid into the accounts was “illicit money”.  She stressed that she knew nothing about where the money came from and that she merely acted on Ah Tong’s instructions.  She admitted that she did not make any enquiries as to the source of the money.  She also attempted to shift the blame to her husband by saying that she believed her husband’s words that the money originated from factory owners in the Mainland or merchants in Hong Kong.

13. The Deputy Judge rejected the respondent’s explanations and found that when she dealt with the enormous sums of money in the accounts, she had reasonable grounds to believe that the money, in whole or in part, directly or indirectly, was “illicit money”.  He found her guilty accordingly.

Reasons for sentence

14. The Deputy Judge pointed out that in their operation of the Mainland-Hong Kong remittance business, the respondent and her husband had dealt with $500,000,000 odd through the five bank accounts.  He found that the respondent only had reasonable grounds to believe that the money in question was “illicit money”, rather than actually know or believe that the money was “illicit money”.

15. The Deputy Judge remarked that the respondent had a clear record and that she committed the offence only because when she was running the Mainland-Hong Kong remittance business, she adopted a thoughtless attitude and was unconcerned about something which came into her sight, so that she fell foul of the law without her being aware of it.

16. The Deputy Judge considered that as much as $500,000,000 was involved in this case but the prosecution evidence could not clearly identify which part of the money was “illicit money”.  He stressed that there was evidence showing that part of the money did originate from the expenses and receipts relating to the business of factory owners and merchants in Hong Kong and in the Mainland.

17. In the view of the Deputy Judge, the present case was of a less serious nature when compared with other similar cases.

18. The Deputy Judge used 21 months’ imprisonment as the starting point and reduced it by three months because of the respondent’s good record and her positive background report, arriving at a sentence of 18 months.

19. Furthermore, the Deputy Judge was of the opinion that the respondent fell under the influence of her husband and thus assisted him in running the remittance business, resulting in her breaking the law.  The Deputy Judge thought that there were special circumstances in this case and ordered that the 18 months’ imprisonment be suspended for two years.

Grounds of application

20. The Secretary’s position is that this case is not a less serious one of its kind, because the “illicit money” dealt with by the respondent was as much as $530,000,000 and the offence was committed over a period of two years and eight months.

21. The Secretary emphasized that the basis of the respondent’s conviction was that she had reasonable grounds to believe that the money involved in the case was “illicit money”, and that this was also the basis of conviction in “money laundering” cases in general, therefore this case is in no way less serious than similar cases.

22. The Secretary maintained that there were no special circumstances in this case which warranted a suspension of the sentence.

Respondent’s case

23. Senior Counsel Cheng Huan, for the respondent, contended that different types of “money laundering” cases have different degrees of seriousness.  The case against the respondent was merely that she had reasonable grounds to believe that the money she dealt with was “illicit money”, therefore her culpability was less than that of a defendant who actually knew that the money he or she dealt with was “illicit money”.  Mr. Cheng stressed that there was no evidence that the money dealt with by the respondent was really “illicit money”, nor was there any evidence showing from what indictable offence the “illicit money” originated.

24. Mr. Cheng argued that to deal with large amounts of money every day was a common way of doing things among remittance agents, and that although the respondent did not comply with the requirements laid down in the law, i.e. to verify the identities of the clients involved in and make records of the transactions, she did keep remittance records of some of the transactions and the authorities could carry out investigation on the basis of such records.

25. Mr. Cheng submitted that the respondent was only responsible for receiving money and remitting money in return for a reward of $5,000 per month, and that she did what she did only at the behest of her husband.

26. Mr. Cheng asked the court to take into account the family background and medical condition of the respondent and to treat her leniently.  He agreed that the sentence passed by the Deputy Judge was on the lenient side but he submitted that it rested on solid ground and that there were special circumstances which supported the suspension of the imprisonment.

Discussion

27. This Court has stressed on a number of occasions that “money laundering” is a very serious offence and that the court has the duty to deter the commission of this offence and to prevent offenders from getting financial gains.

28. In general, the elements of the offence of “money laundering” are centred upon the question of whether the defendant dealt with the money involved in the offence and if he did, then in dealing with the money, whether he had reasonable grounds to believe that the money was “illicit money”.  As to whether the money in question was actually “illicit money” and from what indictable offence the “illicit money” was derived, these are not the elements of the “money laundering” offence.

29. Such being the case, the fact that the money involved in the offence was not in whole or even in part “illicit money” will not render the offence less serious or lead to a lighter sentence.  The defendant’s ignorance of the actual source of the “illicit money” is not necessarily a mitigating factor.  On the other hand, if there is evidence to prove that the money involved in the offence was actually “illicit money”, that it was derived from serious crimes and that the defendant was aware of its origin, that would be an aggravating factor (see HKSAR v Xu Xia-li and Anor [2004] 4 HKC 16; HKSAR v Fan Shek-hung [2008] 4 HKLRD 465; and Secretary for Justice v Wan Kwok-keung (CAAR 13/2010)).

30. Generally speaking, the sentence of a “money laundering” offence should reflect the amount of money involved and the length of time the offence lasted.  The larger the amount of money involved and the longer the time the offence lasted, then the heavier should be the sentence.  The remark made by the Deputy Judge that “The amount of the money in question is not the most important consideration in sentencing in this case” wasincorrect.

31. We do not agree that the fact that at the time of the commission of the offence the respondent was assisting her husband in running a remittance business constituted an exceptional mitigating factor.  The respondent was by no means an ignorant young person manipulated by others.  She voluntarily took part in the “money laundering” criminal activities.

32. Furthermore, in our view¸ the fact that the respondent “laundered illicit money” when she was operating a remittance business increased the gravity of this case.

33. People engaged in remittance business have ample time and various means to deal with large amounts of money.  That would induce those who want to launder “illicit money” to solicit their assistance.  People engaged in remittance business must resist such temptation and cooperate with the police to crack down on “money laundering” activities.  They must not collude with criminals to help them to launder “illicit money”.  It is for this reason that the law compels people who are engaged in remittance business and those engaged in money changing business to verify the identities of the clients and make records in the case of every transaction which is $8,000 or more in value.

34. Measures against “money laundering” and other crimes will be undermined if remittance agents and money changers do not comply with the requirements laid down in the law.  The respondent assisted others in dealing with money in the order of hundreds of millions of dollars and deliberately failed to comply with the statutory requirements, i.e. to verify the identities of the clients and make records of the transactions.  Such conduct must be deterred.

35. We agree with the Secretary’s submission that in the present case there is no exceptional reason for passing an usually lenient sentence on the respondent, nor is there any special reason for suspending the sentence.

36. Over a period of more than two years the respondent dealt with $500,000,000 odd, having reasonable grounds to believe that part of such money was “illicit money”.  The Deputy Judge found that part of the $500,000,000 odd came from normal business transactions among factory owners and merchants in Hong Kong and in the Mainland.  However, according to the facts of the case, the respondent’s attitude to enormous sums of money of dubious origin was that she did not bother to make any enquiries about them.  When she received such sums of money, she just followed instructions and transferred them to other people.  She admitted that she received $5,000 each month as reward on account of her “money laundering” activities.

37. In our judgment, even if the respondent did not believe that the money in question was “illicit money”, or even if sentencing is considered in the manner most beneficial to the respondent, including taking into account the medical report about her mental condition, the appropriate starting point should not be less than five years.

38. Perhaps the respondent needed to loyally support her husband by assisting him in running the business.  She had a good record; her background report disclosed a number of matters in her favour; and the present application is an application for review of sentence.  These factors should warrant an appropriate discount on the sentence.

39. Taking into account all the above considerations, we hold that the appropriate sentence is four years’ imprisonment.

40. The sentence of 18 months passed by the Deputy Judge and his suspension of the sentence were manifestly inadequate and inappropriate, in that they fell outside the range of sentences which a judge, applying his mind to all the relevant factors, could reasonably consider appropriate (see the test formulated by Lord Lane CJ at page 46A in the judgment of AG’s Reference No. 4 of 1989 [1990] 1 WLR 41).

41. For the above reasons, we granted the application for review of sentence made by the Secretary and varied the respondent’s sentence to immediate imprisonment for four years.

Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. P. Y. Lo, Barrister-at-law.