HKSAR v. LAI CHING HANG

DCCC 447/2025

[2026] HKDC 980

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 447 OF 2025

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REASONS FOR SENTENCE

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1.  Mr Lai pleaded guilty before me to 3 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 Lai, between 6 February 2020 and 20 August 2020, both dates inclusive, in Hong Kong, together with a person known as “Ah Fung”, knowing or having reasonable grounds to believe that property, namely a total sum of $10,092,193.14 Hong Kong currency in the bank account with Bank of China (Hong Kong) Limited, account number 01288920186643, 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 Lai, between 4 May 2020 and 3 November 2020, both dates inclusive, in Hong Kong, together with a person known as “Ah Fung”, knowing or having reasonable grounds to believe that property, namely a total sum of $2,721,771.05 Hong Kong currency in the bank account with Hang Seng Bank, Limited, account number 937324945882, in whole or in part, directly or indirectly represented any person’s proceeds of an indictable offence, dealt with the said property.

4.  Particulars of Charge 3 are that Mr Lai, between 7 January 2020 and 28 December 2021, both dates inclusive, in Hong Kong, together with a person known as “Ah Fung”, knowing or having reasonable grounds to believe that property, namely a total sum of $1,977,940.97 Hong Kong currency in the bank account with The Hongkong and Shanghai Banking Corporation Limited, account number 506580158292, 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 Lai

Charge 1: Mr Lai’s Bank of China (Hong Kong) Limited account numbered 01288920186643 (“BOC account”)

5.  According to the opening mandate of the BOC account, the account was opened by Mr Lai as the sole authorized signatory on 6 February 2020.  Mr Lai reported himself as a salesperson.  Between 6 February and 20 August 2020, the BOC account received a total of 27,295 deposits totalling $10,092,193.14.  In the same period, the account made 6,976 withdrawals dissipating $10,078,294.18.  The deposits were followed by quick withdrawals.  The transaction volume and the pattern of transactions were incommensurate with Mr Lai’s financial background.

6.  On 20 November 2020, at 6:35 am, Mr Lai was arrested at his home in Tuen Mun.  Under caution, Mr Lai said, “The account was not used by me.  I lent the account to my friend after receiving $2,000 from my friend.  I had no knowledge about what my friend used the account for and the details of the transactions.”

7.  On 20 November 2020 and 21 April 2021, Mr Lai attended two cautioned VRIs.  There he stated that:

(a) He sold the subject account to his casual friend ‘Ah Fung’ for $2,000 soon after he opened the BOC account on 6 February 2020;

(b) He provided all account details, e-banking ID and password to this friend; and

(c) He could not control the BOC account afterwards and had no knowledge about the transactions.

Charge 2: Mr Lai’s Hang Seng Bank Limited account numbered 937324945882 (“HSB account”)

8.  According to the opening mandate, the HSB account was opened by Mr Lai on 4 May 2020 as its sole authorized signatory.  Mr Lai reported himself as a full-time salesperson.  Between 4 May and 3 November 2020, the account received 158 deposits totalling $2,721,771.05 and made 160 withdrawals dissipating $2,721,770.94.  The deposits were quickly dissipated.  The transaction volume and the pattern of transactions were incommensurate with Mr Lai’s financial background.

Charge 3: Mr Lai’s HSBC account numbered 506580158292 (“HSBC account”)

9.  Between 21 and 22 February 2020, six deposits totalling $52,800 were paid to the HSBC account by PW1-3, who made the deposits as victims of fraudulent sales of surgical masks.

10.  According to the opening mandate, the HSBC account – a children’s savings account – was opened by Mr Lai on 5 October 2015 as its sole authorized signatory with Mr Lai’s father as his guardian.  Between 7 January 2020 and 28 December 2021, the HSBC account received a total of 773 deposits totalling $1,977,940.97, including the aforesaid $52,800 fraud proceeds from PW1-3.  In the same period, the account made 1,200 withdrawals dissipating $1,977,680.26. The transaction volume and the pattern of transactions were incommensurate with Mr Lai’s financial background.

11.  During the cautioned VRI conducted on 27 March 2024, Mr Lai stated that:

(a) The account was opened for savings purpose when he was a child;

(b) He had a monthly income of around $40,000 between December 2019 and January 2021;

(c) The HSBC account was for daily transactions; and

(d) The phone numbers used for opening the HSBC account were his personal phone number and the landline number of his home.

12.  Mr Lai now admits the particulars of the offence of the 3 charges.

Criminal record

13.  Mr Lai has a previous clear record.

Antecedents

14.  Mr Lai is aged 27 (21-23 at the time of the offences), educated to Secondary 3 level, formerly worked as a salesperson (with monthly salary $20,000) and food delivery worker (with monthly salary $10,000).

Mitigation

15.  Ms Tiffany Cheung of counsel mitigated on behalf of Mr Lai.  The following is a summary of the mitigation submissions.

16.  In January 2020, Mr Lai was approached by a friend of approximately 10 years’ standing, known to him only as “Ah Fung”.  Mr Lai trusted him deeply. Ah Fung asked to borrow Mr Lai’s HSBC account, which Mr Lai had previously used.  Ah Fung told Mr Lai that, as he was working as a contractor of a construction site, he needed a bank account to transfer salaries to his workers.  Trusting Ah Fung without question, Mr Lai handed over the HSBC account details, including the online banking password, ATM card and PIN.  He received no remuneration.  Mr Lai did not use the HSBC account any more. (Charge 3)

17.  Less than one month later, in early February of 2020, Ah Fung again approached Mr Lai and asked him to open a new bank account with BOC and to hand over the BOC account for the same stated purpose of transferring salaries.  On the day the BOC account was opened, Mr Lai surrendered control of the BOC account (including the online banking password, ATM card and PIN) to Ah Fung. Mr Lai did not use the BOC account thereafter.  On this occasion, Mr Lai received remuneration of $2,000. (Charge 1)

18.  Several months later, in early May 2020, Ah Fung once again requested Mr Lai to open another account, this time with Hang Seng Bank, purportedly for the same purpose.  Trusting his friend and without properly considering the consequences of his actions, Mr Lai complied and handed over the HSB account. On the day the HSB account was opened, Mr Lai surrendered control of the HSB account (including the online banking password, ATM card and PIN) to Ah Fung. He received no remuneration.  Mr Lai did not use the HSB account thereafter. (Charge 2)

19.  Mr Lai was arrested on 20 November 2020 but was not charged until 24 December 2024 (and was first brought to court on 7 January 2025).  Over the years, he was very stressed and anxious about the offences.

20.  Mr Lai made frank admissions to the police under caution.  He pleaded guilty at the earliest opportunity.  The full 1/3 sentencing discount is asked for.  Mr Lai committed the offences out of greed and foolishness.  There is no evidence to suggest that Mr Lai would have known the nature of the predicate offence.  His role was a stooge account holder who allowed others to use his accounts.  Mr Lai was not the mastermind but was used as a foot soldier by the major player Ah Fung who orchestrated the fraud.  This case did not involve an international dimension; there was no sophistication; the evidence did not disclose an organized criminal syndicate.

21.  In delivering the judgment of the Court of Appeal in HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, Cheung JA said:

“Sentencing principles

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:

(a) 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.

(b) 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.

(c) 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.

(d) 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.

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

22.  In HKSAR v Boma [2012] 2 HKLRD 33, para 40, the Court of Appeal said a sentencing court should take into account the following non-exhaustive list of features when dealing with offences of money laundering:

(a) The nature of the 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 organized criminal syndicate would be an aggravating feature;

(f) Whether there was one transaction or many and 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;

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

23.  In Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201, Yeung JA (as he then was), in giving the judgment of the Court of Appeal, said at para 15:

“15. 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 sentencing starting point is 3 years or so where the “black money” involved is between $1 million and $2 million; 4 years or so where it is between $3 million and $6 million; and could be over 5 years where it is above $10 million.”

24.  The defence has no submissions to make on the prosecution’s intention to furnish information pursuant to section 27(2) of OSCO, Cap 455, with a view to asking for enhanced sentence.  The court is urged to impose a lenient sentence on Mr Lai, taking into account the totality principle and the overlapping period among the three offences.

25.  Ms Cheung submitted on behalf of Mr Lai two mitigation letters written in Chinese respectively by Mr Lai himself and his father.  The contents generally are that Mr Lai committed the offences out of momentary recklessness when he lent out his bank accounts to a friend whom he wrongly trusted; that Mr Lai is very regretful and remorseful; that the case has been dragging on in his mind for almost 6 years during which time he was under psychological stress and depression; that he promises never to re-offend.  The letter writers asked for a lenient sentence and a chance for Mr Lai so he may return home to take care of his aging father.

Sentence

26.  Ms Cheung appears to rely on delay in prosecution as a mitigating factor.  To succeed, there has to be undue or unreasonable delay in prosecution.

27.  For this reason, I have called for a Chronology of Events – one signed by DIP Chan Ka Lung dated 27 May 2026 was filed as a result.

28.  I looked at it globally to find if there was any unreasonable lapses of time between first arrest and eventual charging of Mr Lai.  I bear in mind money laundering is widely known to be a prevalent offence and it continued to drain on the resources of both the police and the banks in dealing with such suspected offences.  I bear in mind Mr Lai remained silent under Charge 2 and gave only limited information to the police under Charge 3, hence making investigation more difficult and more timely.

29.  Although the overall time taken was long (about 4 years), it was not overly long in all the circumstances.  I rule that there was no undue or unreasonable delay in prosecution.

30.  I bear in mind the sentencing authorities cited by Ms Cheung.

31.  This case has the following features: the total amount laundered under the 3 charges came to about $14.7 million; the predicate offence at least insofar as Charge 3 is concerned appears to be fraud; however, there is no evidence to suggest that Mr Lai knew about the nature of the predicate offence; across all three accounts, the total number of deposits came to 28,226 and the total number of withdrawals came to 8,336 over a total period of about 24 months; Mr Lai’s role appeared to be a stooge account holder who sold/lent his accounts for others’ use in return at least under Charge 1 for $2,000.

32.  I intend to take a global approach and noting the above features of the case, I will adopt a global starting point of 5 years and 3 months’ imprisonment[1].

33.  Mr Lai pleaded guilty to the charges in good time.  He shall be entitled to the customary 1/3 sentencing discount.  For his previous clear record, I shall grant him an additional one month off.  Although there was no undue or unreasonable delay in prosecution, it cannot be gainsaid that 5 ½ years have elapsed since his first arrest.  On compassionate ground, I will grant him one more month off.  Other than those, I cannot discern any mitigating factors of weight that will have the effect of reducing the sentence further.

34.  Prosecution sought to furnish a Chinese witness statement of CIP Li Yiu Nam dated 29 April 2026 (with English translation) pursuant to section 27(2) of OSCO, Cap 455.  The purpose was to show (a) the 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.  The prosecution sought to ask for enhanced sentences on these two bases.

35.  Defence offered no objection to the court’s reception of the statement nor to the prosecution’s associated request for enhanced sentences based on it.

36.  I will rely on the English translation of the statement from now on. Page numbers refer to those on the English translation.

37.  According to Table A on page 10 of the statement, the total number (projected) of stooges arrested (ie those who assisted in money laundering activities many of whom had either sold or lent their accounts at financial institutions) in the whole of 2026 will be 5,920.  This when compared with the corresponding figure in 2025 of 5,335 will represent a modest increase.  The absolute figure will remain high.

38.  Thus, I am satisfied that the use of stooges in money laundering activities and, by implication, the money laundering offences themselves (even if only suspected) are still prevalent.

39.  According to Table B on page 13 of the statement, the amount (projected) of reported monetary losses (including losses by overseas victims) and proceeds laundered locally both involving the use of local stooge accounts in the whole of 2026 will come to $1,660.84M.  This compares with the corresponding figure in 2025 of $3,993.14M.  Although this will mean a projected drop of about 58% from 2025, the absolute figure is still huge.

40.  However, the nature and extent of harm to the community is not limited to the amount of reported losses and laundered proceeds.

41.  According to para 18 on pages 11-12 of the statement, the anti-money laundering regime in Hong Kong is hampered by the [prevalence] (普遍) of stooges for money laundering activities as follows:-

(a) The [prevalence] (盛行) 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.

42.  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.

43.  I conclude that both bases upon which the prosecution relies for request of enhanced sentences have been made out.  My power under section 27(11) of OSCO, Cap 455, is therefore engaged.

44.  In light of the current state of the statistics, I deem a 20% enhancement sufficient to deter Mr Lai and like-minded persons from committing a similar offence.

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

46.  I will impose an individual enhanced sentence on each of the charges and make an appropriate order in order to arrive at the global enhanced sentence.

(Mr Lai, please stand)

47.  On Charge 1, the sentence is 45 months’ imprisonment.

48.  On Charge 2, the sentence is 28 months’ imprisonment.

49.  On Charge 3, the sentence is 26 months’ imprisonment.

50.  I order that two months of the sentence on Charge 2, and one month of the sentence on Charge 3, are each to run consecutively to the sentence on Charge 1, making a global sentence of 48 months’ imprisonment for Mr Lai.