HKSAR v. YAN CHEUK HANG

DCCC 1590/2024

[2026] HKDC 1378

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 1590 OF 2024

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REASONS FOR SENTENCE

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1.  Mr Yan pleaded guilty before me to two charges 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 of Charge 1 are that Mr Yan, between 6 and 13 October 2023, both dates inclusive, in Hong Kong, together with unknown person(s), knowing or having reasonable grounds to believe that property namely a total sum of $2,598,796.65 Hong Kong currency in the bank account with Standard Chartered Bank (Hong Kong)  Limited, account number 406-8-691663-1, in whole or in part directly or indirectly represented any person’s proceeds of an indictable offence, dealt with the said property.

3.  Particulars of Charge 2 are that Mr Yan, between 6 December 2023 and 9 February 2024, both dates inclusive, in Hong Kong, together with unknown person(s), knowing or having reasonable grounds to believe that property namely a total sum of $1,924,428.43 Hong Kong currency in the bank account with Hang Seng Bank, Limited, account number 352878516888, 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 Yan

4.  PW1 to PW6 fell prey to online investment scams.  Between 6 October 2023 and 19 December 2023, they were deceived to remit funds into bank accounts, including the Charge 1 account and Charge 2 account.  After realizing they were scammed, they made separate police reports.

5.  Investigation revealed that Mr Yan was the account holder and sole signatory of the Charge 1 and Charge 2 accounts.

6.  It was revealed that the Charge 1 account was opened by Mr Yan on 20 September 2023.  In the opening documents of the account, Mr Yan was reported to be unemployed.  Copy of Mr Yan’s HKID card and his liveness photo were attached to the opening documents.

7.  It was revealed that the Charge 2 account was opened by Mr Yan on 10 November 2023.  In the opening documents of the account, Mr Yan was reported to be a waiter at a bar with annual income of about $216,000.  Copy of Mr Yan’s HKID card was attached to the opening documents.

8.  Mr Yan was arrested by different police teams on 10 January 2024 and 14 August 2024.

9.  Fund Flow Analysis of the Charge 1 account between 6 and 13 October 2023 showed there were 72 deposits in the total amount of $2,598,796.65 with corresponding 71 withdrawals in the total amount of $2,598,719.16.

10.  Fund Flow Analysis of the Charge 2 account between 6 December 2023 and 9 February 2024 showed there were 93 deposits in the total amount of $1,924,428.43 with corresponding 88 withdrawals in the total amount of $1,921,370.

11.  Mirror patterns observed in the two accounts indicated that they were used as temporary repository of funds.  The deposits of the relevant victims of the scams could be identified in the bank records of the two accounts.

12.  The amounts transacted in the two accounts were incommensurate with Mr Yan’s financial means.

13.  Mr Yan now admits the particulars of the two charges.

Criminal record

14.  Mr Yan has a clear record.

Antecedents

15.  Mr Yan is aged 22 (20 or thereabout at the time of the offences), educated to high school level.  He worked as a waiter with a monthly salary of about $18,000.  Mr Yan was living with his parents in public housing in Choi Hung.

Mitigation

16.  Mr Henry Ng of counsel assigned by the Director of Legal Aid mitigated on behalf of Mr Yan.  The following is a summary of the mitigation submissions.

17.  Mr Yan has a clear record.  He is the sole breadwinner of the family consisting of his parents (aged 63 and 60).  Mr Yan also has an elder brother (29)  who is single and unemployed.

18.  Mr Yan’s father has been out of work for 10 odd years due to health issues.  Mr Yan’s mother is a housewife and suffers from depression.

19.  Before resignation as a result of arrest and remand, Mr Yan had been a waiter at a bar for 1.5 years earning about $18,000 a month.  Every month, he kept $5,000 for himself and gave the rest to his parents.

20.  Mr Yan pleaded guilty as soon as possible showing his remorse.

21.  When he was working as a waiter in a bar, he met a female who claimed to be involved in Crypto trading.  She said she did not have enough bank accounts and asked Mr Yan to lend her bank accounts for a reward of $5,000 each.

22.  Mr Yan foolishly committed the offences because of his greed for quick money.  He was young and reckless and did not think of the consequences. Hence, he opened and lent the two bank accounts.

23.  The maximum penalty for this offence is imprisonment for 14 years and a fine of $5 million.

24.  The Court of Appeal has not set sentencing guidelines for the charge of “money laundering”.  Generally speaking, the main sentencing factor for the crime of “money laundering” is the amount of “black money”.  The larger the amount, the heavier the sentence, but the amount involved is neither the only nor the most important consideration.

25.  In HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, the Court of Appeal stressed again the fact-sensitive nature of the offence regarding sentence. However, the amount of the money laundered is a major sentencing consideration.  In para 9 thereof, Cheung JA stated:

“9.  There are no sentencing guidelines for the offence of dealing with the proceeds from an indictable offence because the facts vary from case to case. However the following factors are to be taken into account when determining sentence:

(1)  It is the amount of money involved that is a major consideration and not the amount of benefit received by a defendant in the transaction.

(2)  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.

(3)  The offence of dealing with the proceeds from an indictable offence does not necessarily have any direct correlation with the indictable offence in question. However if the relevant indictable offence can be identified, the court may take into account the sentence imposed on the indictable offence [per] se when determining the sentence of the dealing offence.

(4)  If the case has an international element involving activities carried out across different regions, the court may impose a more severe sentence. This is to protect Hong Kong's reputation as an international finance and banking hub from being tarnished.

(5)  The length of time the offence lasted.”

26.  In Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 197, Yeung JA (as Yeung VP then was)  observed that:

“12. “Money laundering” is a serious offence for not only does it encourage criminal activities indirectly, but also attempt to legitimize the proceeds of crime. In order to crack down on serious crimes, to prevent offenders from getting financial gains, it is necessary to deter the commission of the “money laundering” offence (See Court of Appeal cases HKSAR v Javid Kamran (CACC 400/2004), HKSAR v Xu Xia Li and another [2004] 4 HKC 16, etc.).

13. Generally, the sentence for “money laundering” offence 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.

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

15. In HKSAR v Hsu Yu Yi [2010] 5 HKLRD 536, Cheung JA set out the amounts of money involved and the sentences passed in a number of “money laundering” cases. The sentencing starting point is 3 years or so where the “black money” involved is between 1 million and 2 million dollars, 4 years or so where it is between 3 million and 6 million dollars, and could be over 5 years where it is above 10 million dollars.”

27.  In HKSAR v Boma [2012] 2 HKLRD 33, the Court of Appeal emphasized that “the question of the amount laundered is not the be-all and end-all of a case, but is a significant feature”.  The Court went on to elaborate on the other relevant factors to be considered (at para 40 of the judgment):

(1)  The nature of the predicate offence;

(2)  Whether the defendant knew what the predicate offence was;

(3)  Whether there is an international element;

(4)  Whether the offence of “money laundering” involves elaborate steps, schemes or fraudulent means;

(5)  Whether there is a criminal syndicate;

(6)  The number of transactions and the length of time during which the offences were committed;

(7)  Whether the defendant continued to launder money after knowing the nature of the predicate offence;

(8)  The role and remuneration of the defendant.

28.  The total amount of money involved for both offences is $4,523,225; the total reward was $10,000.

29.  Mr Yan had no knowledge of the money that was deposited into the accounts.  His role was to open the two accounts and pass over control of them to someone for monetary reward.

30.  Mr Yan admits he had reasonable grounds to believe the two accounts would be used for unlawful purposes whilst letting another person control the two accounts.  His role was merely a stooge bank account holder; he did not deal with the funds which went through the accounts.

31.  Charge 1 lasted for only 8 days and Charge 2 lasted for about 2 months. The modus operandi was not complicated.  Mr Yan was not a member of the criminal syndicate perpetrating the predicate online investment scam.  He knew nothing about the nature of the money transfer.  His case lacked international dimension and sophistication.

32.  It was submitted that a global starting point of sentence of around 4 years’ imprisonment is appropriate.  The court is reminded to give Mr Yan the usual 1/3 sentencing discount for his pleas.

33.  Mr Ng does not object to the prosecution’s request for enhancement of sentence pursuant to OSCO, Cap 455.

34.  The Court of Appeal has held that when considering enhancement of sentence, the sentencing court should consider whether the offence was prevalent at the time of sentencing, not at the time of the offence.

35.  Moreover, what the prosecution has to prove is the prevalence of the offence, not the increase in the number of offences.

36.  Mr Ng submitted that the public’s awareness and vigilance towards this offence has increased.

37.  Mr Ng asked that the enhancement be within the 20-25% range.

38.  Mr Ng submitted on behalf of Mr Yan two mitigation letters written in Chinese respectively by Mr Yan himself and his father.  The contents generally are that Mr Yan is regretful for his misdeeds.  The letter writers asked for sympathy so that Mr Yan may return to take care of his aged parents as soon as possible.

Sentence

39.  I have taken note of the comprehensive submissions urged upon me by Mr Ng.

40.  I agree that a global starting point of sentence be adopted.  Having taken into account the amount of money laundered and the Boma factors[1] or lack thereof, and Wan Kwok Keung para 15, I am of the view that a global starting point of sentence of 4 years’ imprisonment would be appropriate.

41.  Mr Yan pleaded guilty in good time.  He shall be entitled to the 1/3 sentencing discount.  For his previous clear record, I shall grant him an extra one month off after the 1/3.  There are no other mitigating factors of weight to justify another sentence reduction.

42.  There is no objection to the prosecution’s intention to furnish information in the form of a statement by CIP Li Yiu Nam dated 30 June 2026 (“the Statement”)  pursuant to section 27(2)  of OSCO, Cap 455, with a view to showing (a)  prevalence of money laundering offence; and (b)  the nature and extent of any harm, whether direct or indirect, caused to the community by recent occurrences of money laundering offence.  These are the two grounds upon which the prosecution asked the court to enhance the sentences of Mr Yan.

43.  I duly received the Statement.

44.  There is also no objection to the prosecution’s request for enhancement of sentences pursuant to OSCO, Cap 455; however, Mr Ng asked the court to confine the enhancement scope to between 20 and 25%.

45.  According to Table A on page 5 of the Statement, the total number of stooges expected to be arrested (ie those who assisted in money laundering activities many of whom had sold their accounts at financial institutions)  in the whole of 2026 (by extrapolation)  will stand at 6,026.  This compares with the corresponding historical figure of 5,355 in 2025.  It represents an unenviable increase of 12.5%.

46.  I am satisfied the use of stooges in money laundering activities and by implication the money laundering offence itself (even if only suspected)  is still prevalent.

47.  According to Table B on pages 6 and 7 of the Statement, the expected amount of reported monetary losses (including from overseas victims)  and of proceeds laundered locally both involving local stooge accounts in the whole of 2026 (by extrapolation)  will come to $1,960.66M.  This when compared with the corresponding historical figure in 2025 of $3,933.14M represents a drop of about 50%.  Although a significant drop, the absolute figure for 2026 is still huge for all intents and purposes.

48.  However, the harm to the community is not limited to reported losses to local victims.

49.  According to para 18 of the Statement, the anti-money laundering regime in Hong Kong is hampered by the prevalence of stooges for money laundering activities in the following ways:-

(a)  The prevalence of stooge accounts (“PSA”)  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)  PSA 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)  PSA substantially facilitates the commission of crimes and in turn leads to more crimes being committed, as the masterminds could easily get away from their criminal liability;

(d)  PSA 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)  PSA 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.

50.  From the figures I recited above from Table B, and from what PSA can do to the community, I am satisfied that the harm caused to the community by recent occurrences of money laundering offence is still substantial.

51.  I am of the view that the two grounds for sentence enhancement have been made out.  I rule that that my power to enhance sentence under section 27(11)  of OSCO, Cap 455, can be engaged and I hereby invoke this power.

52.  Regarding the extent of enhancement, I adjudge a 23% enhancement will be sufficient to act as an additional deterrent against Mr Yan and would-be followers.

53.  I will impose individual enhanced sentences for both charges and make an appropriate order to arrive at the final global sentence.

54.  As an act of mercy, I will ignore the decimal places in the calculation of the sentences in terms of months.

(Mr Yan, please stand)

55.  For Charge 1, the sentence is 28 months’ imprisonment.

56.  For Charge 2, the sentence is 28 months’ imprisonment.

57.  I order that 10 months of the sentence on Charge 2 is to run consecutively to the sentence on Charge 1, making a final global sentence of 38 months’ imprisonment for Mr Yan.