HKSAR v. MAN YIU PUN

CACC 198/2018

[2022] HKCA 338

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 198 OF 2018

(ON APPEAL FROM DCCC NO 431 OF 2017)

_______________

_______________

__________________________________

REASONS FOR JUDGMENT

__________________________________

Hon Zervos JA (giving the Reasons for Judgment of the Court):

Introduction

1.  The appellant stood trial before District Court Judge Dufton (the judge) on two charges of conspiracy to deal with property known or believed to represent the proceeds of an indictable offence, contrary to section 25 (1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455 and sections 159A and 159C of the Crimes Ordinance, Cap 200.  He was convicted of both charges and was sentenced to a total term of 4 years and 5 months’ imprisonment.

2.  At the conclusion of the hearing we dismissed the appeal and said we would hand down our reasons in due course.  These are our reasons.

The appeal ground

3.  The appellant filed a notice of application for leave to appeal against his conviction and sentence.  On 28 April 2020, the leave application was heard by a Single Judge, who granted leave only in relation to his conviction on the limited basis that “in determining that the [appellant] had reasonable grounds to believe, the judge may have erred in the matters to which he had regard and in the weight to which he gave those matters”.^[1]

4.  Mr Trevor Beel, who appeared for the appellant, in his Amended Perfected Grounds of Appeal dated 1 June 2020, articulated the terms of the ground on which leave was granted as follows:

“The judge erred in law in that he failed to evaluate the evidence in a safe and proper manner in regard to his findings and reasons that the appellant had reasonable grounds to believe at the time of the agreement with the 4^th defendant that the named property in both charges in whole or in part directly or indirectly represented any person’s proceeds of an indictable offence. Thereby, in all the circumstances the conviction against the [appellant] is unsafe or unsatisfactory.”[2]

The charges and the defendants

5.  In total, there were nine charges brought against four defendants; the appellant was the 3^rd defendant, (D3), at trial. All charges involved the offence of money laundering, either as a substantive offence or as a conspiracy to commit the substantive offence.  The appellant was charged alone in respect of Charges 5 and 9, which were conspiracy offences where the unindicted co-conspirator was particularised as “a Nigerian male Okafor Joek Kingsley” (the 4^th defendant, (D4), at trial, also referred to as “Joe”).  The 1^st defendant, (D1), was charged alone in respect of Charges 1 and 2, and jointly charged with the 2^nd defendant, (D2), in respect of Charges 3 and 4.  Charge 4 was an alternative to Charge 3.  Charges 1, 2 and 3 were conspiracy offences where the unindicted co-conspirator was particularised as “a Nigerian male alias Joe”.  Charge 4 was a joint offence against D1 and D2.  Both D1 and D2 testified that the unindicted co-conspirator in the charges they faced was D4.

6.  D4 was alleged to be involved in the allegations against each of the other three defendants, but he was not charged with these offences.  Instead, D4 was charged alone with three separate offences of money laundering under Charges 6, 7 and 8, in which it was alleged that he committed the offences together with another person, Casia Grace Garcia (PW4 at trial).

The particulars of Charges 5 and 9

7.  The particulars of Charge 5 alleged that the appellant:

“… between a date unknown in December 2012 and the 21^st day of January 2013, both dates inclusive, in Hong Kong, conspired together with a Nigerian male OKAFOR Joek Kingsley, knowing or having reasonable grounds to believe that property, namely a total sum of $7,653,697.40 Hong Kong currency, in whole or in part directly or indirectly represented any person’s proceeds of indictable offence, to deal with the said property.”[3]

8.  The particulars of Charge 9 alleged that the appellant:

“… on or about the 17^th day of September 2012, in Hong Kong, conspired together with a Nigerian male OKAFOR Joek Kingsley, knowing or having reasonable grounds to believe that property, namely a sum of $523,382.67 Hong Kong currency, in whole or in part directly or indirectly represented any person’s proceeds of indictable offence, to deal with the said property.”[4]

The trial

9.  From the particulars of the charges, the duration of the conspiracy in Charge 5 was “between a date unknown in December 2012 and the 21^st day of January 2013”, whilst the duration of the conspiracy in Charge 9 was “on or about the 17^th day of September 2012”. Charge 9 was the first in time, in which it was alleged that the appellant used his own bank account on one occasion to assist D4 in laundering a sum of money through it.  Charge 5 alleged that the appellant registered a business for D4 called Asia Supply Resources (“ASR”) and opened a business bank account for ASR which would enable D4 to receive monies into the account and then deal with these monies.

10.  Most of the prosecution case was admitted at trial.  This only necessitated the prosecution in calling one witness, a police officer who had visited the registered address of ASR.

11.  The defence case was that the appellant trusted D4, and assisted him to set up and operate what he believed was a legitimate business and had no knowledge of any wrongdoing.  The appellant testified that he had not conspired with D4 to launder the monies involved as he believed he was helping a friend.

12.  D1 died during the course of the trial but only after he had testified in his defence.  D4 also testified in his defence and parts of his evidence and D1’s evidence were relevant to the appellant’s case.  The case against D2 was distinct from the appellant’s case, although there were similarities between them.  It was alleged that D2 conspired with D1 and D4 to set up Asia Trading Co and open a bank account for the sole purpose of money laundering.  D2’s case was that he assisted D4 to do genuine business in buying and selling clothes for D4 and did not suspect the monies remitted to the account were from illegal sources.[5]

Charge 5

13.  It was an admitted fact that the appellant registered ASR as a sole proprietorship and commenced business on 26 October 2012.^[6] Its business was declared to be “Import & Export, Resources” with its registered address at “2/F, No. 550 Canton Road, Kowloon”.^[7]  The appellant opened a bank account for ASR with Nanyang Commercial Bank on 31 October 2012.^[8]  

14.  Between 1 December 2012 and 3 January 2013, a total sum of $7,653,697.40 was deposited into the ASR account.  Except for the initial deposit of $50,000 cash, the monies deposited into the account were by way of eight overseas remittances.  Between 6 December 2012 and 20 January 2013, all the monies in this account, other than $22.38, were withdrawn by way of ATM transactions and by multiple cheques being issued to various payees, including 11 cheques payable to D1, which were deposited into his personal savings account.[9]  As the appellant was the account holder, he was the drawer of these cheques and retained custody of the cheque book, although he had provided the means for D4 to operate the account.  The ASR account was eventually closed on 21 January 2013. 

15.  The offence period alleged under Charge 5 from 1 December 2012 to 21 January 2013 coincided with the financial transactions that took place through the ASR account, although the prosecution relied on the setting up of ASR and the registration of the account as evidence proving the existence of the conspiracy alleged.^[10]

16.  The appellant did not report to the Inland Revenue Department any income for himself or on behalf of ASR for the period from 1 April 2011 to 31 March 2015,^[11] nor did he disclose ownership or interest in any real property.^[12]  Furthermore, between 1 January 2012 to 1 January 2015, no import or export declaration was lodged by ASR.^[13]  

Charge 9

17.  It was an admitted fact that the appellant opened a savings account with the Hong Kong and Shanghai Banking Corporation on 28 September 1987.  He was the sole signatory of it.^[14]  This was the bank account relevant for Charge 9.

18.  The prosecution case was that the appellant had conspired with D4 to deal with $523,382.67 that had been remitted to the appellant’s personal account on 17 September 2012, knowing or having reasonable grounds to believe these monies represented the proceeds of an indictable offence. On 19 September 2012, $560,000 was withdrawn from the account. 

The appellant’s cautioned interviews

19.  The appellant was arrested when he was intercepted at Lo Wu Control Point on 2 May 2013.^[15]  The police conducted two cautioned interviews and two video records of interview with him. The voluntariness of the interviews was not challenged.^[16]  

20.  In these interviews, the appellant admitted that he had set up ASR and opened the bank account for ASR at the direction of D4.  He had known D4 for about 10 years.  D4 wanted to do business with him and that was why ASR was established.  Other than paying the registration fee for ASR, he had not invested any money in the business.  He was the sole signatory of the ASR account and he had written cheques drawn on the ASR account on the instructions of D4.  He received $1000 to $3000 a couple of times from D4 but could not recall the exact amounts.  He closed the account due to complaints by the bank in respect of problematic remittances (Charge 5).[17] 

21.  He also admitted that he allowed D4 to use his personal savings account for monies to be remitted into that account, which he subsequently withdrew and gave to D4.  On 19 September 2012, he and D4 went to the bank and withdrew $560,000 cash from his account and he gave cash in the sum of $523,382.67 to D4 (Charge 9).[18]  

22.  In support of its case, the prosecution submitted, amongst other things, that the appellant did not enquire into the business nature of the companies from which the monies were remitted; he blindly followed D4’s instructions; he did not know any of the payees; he turned a blind eye as to the source of the funds in not making any enquiry with D4; and his visit to a container depot in Kam Tin provided a doubtful basis for him believing D4 had “a big business” that generated the monies involved.^[19]

The appellant’s defence

23.  It was the defence case that there was no direct evidence to prove the existence of a conspiracy between the appellant and D4,^[20] nor was there evidence to show that the appellant knew the funds represented the proceeds of crime.^[21] 

24.  The appellant gave evidence and called his younger sister, Ms Man Yung Kuen.  Ms Man testified that the premises of the registered address of ASR were owned by her and that they had been used as an office for the jade business of her husband and the appellant.^[22] 

25.  The appellant testified that he was retired and had previously worked as a jade trader since 1986.  He conducted his business out of a premises owned by his sister at 550 Canton Road. 

26.  In respect of Charge 5, the appellant said that he set up ASR and opened the ASR account for D4 in order to help D4 do business.  As D4 was a foreigner and could not produce proof of residence for business registration, he asked the appellant to register the business and open a bank account for him.  In respect of Charge 9, the appellant said he helped D4, who was his friend, to receive a remittance from his major customer by lending his personal savings account to D4 because he did not have a bank account. 

27.  In his records of interview,^[23] the appellant said he first got to know D4 about 7 years ago at a bar in Lan Kwai Fong, as he would drink beer with him and sometimes do translation for D4 when D4 purchased goods in Yuen Long.  He said D4 had taken him to a container depot in Kam Tin where many foreign workers were working and that they were helping D4 pack goods into containers.^[24] He said he had seen an old identity card of D4, and on occasion he would help D4 move goods, for which D4 would pay him money.  He said D4 traded new and second hand electrical appliances in Yuen Long, which he would forward to Africa for trading.^[25]

28.  The appellant explained that his personal savings account had been open for 30 years and was mainly used to pay expenses and bills.  In September 2012, D4 had told him that he needed a bank account as he had a major customer from whom he needed to receive money and so the appellant helped him by lending him his account.^[26]

29.  In his first written record of interview, the appellant explained that in September 2012, D4 had said his major customer wanted to deposit money in his account but as D4 did not have an account he asked to borrow his account.  He testified that D4 informed him that the remittance of $523,382.67 had been deposited into his account and as a result they went together to the bank on 19 September 2012.  The appellant withdrew $560,000.00 in cash which he handed over to D4. 

30.  The appellant was referred to his record of interview where he said he only gave $523,382.67 to D4 and kept the rest for his personal use.^[27]  He said this was so long ago that he could not remember how much he had given to D4.  He said he knew nothing at all about the source of the money and received no reward for having helped his friend.^[28]  It was put to the appellant in cross-examination that a withdrawal of $12,350 made on 19 September 2012 was his reward, to which proposition he disagreed.^[29]  

31.  The appellant testified that D4 gave him $50,000 to open the ASR account, and that he gave the ATM card to D4, and issued the cheques on the instructions of D4.^[30]  The appellant was asked about the residential address in Sham Shui Po in the business registration.  He said he was instructed by D4 to use that address and had no idea whose address it was.  In cross-examination, he was asked why he did not ask D4 to produce a proof of address, and in response he said he had not thought about it.^[31] 

32.  ASR’s registered address was the office of the appellant’s former partner in the jade trade, and was to be used as a correspondence address only.^[32]  He said that except for paying the registration fee he did not contribute any capital,^[33] because he “did not believe those black guys”^[34] and the business of ASR was buying things such as electrical appliances, auto parts and plastic flowers, which D4 would then ship to Nigeria.^[35]  The appellant said D4 would pay him “tea money” when there were profits to share.  He did not think it unreasonable to have received this money as he had helped D4 transport the goods.^[36]

33.  Of the 8 overseas remittances (amounting to HK$7,653,697.40), the appellant said he did not know the companies which made the remittances, but was only told by D4 that his customers had remitted the money.  He said that each time money was remitted to the account, D4 would inform him about it and instruct him to issue cheques, which he gave to D4.  None of the ATM withdrawals were made by him as he had given the ATM card to D4.^[37]  He was instructed by D4 to write the names of the payees on the cheques.^[38]

34.  The appellant acknowledged that D1 was his friend, whom he had known for many years, and that he was a taxi driver.  He did not ask D4 why monies were being transferred to D1 because he knew D1 and D4 were doing business together.^[39]  

35.  The appellant said in his video record of interview that he did not find the deposit of the eleven cheques suspicious because he had asked D1 to source goods in mainland China for D4 and did not feel that D4 was doing something illegal.^[40]  However, he said he started to suspect something “when the bank contacted him saying money had been wrongly remitted but did not think of reporting his suspicion to the police”.^[41]  

36.  In his evidence, D4 denied any involvement in relation to the offences in Charges 5 and 9.  He denied ever asking the appellant to open a bank account for him and claimed he never had any ongoing business venture with D1.  He also denied the allegations made against him by D1 and D2.^[42]

The verdict on Charges 5 and 9

37.  The judge conducted an extensive review of the evidence, during which he resolved factual issues and made findings of fact.

38.  In addressing the facts and circumstances that were known to the appellant at the relevant time, the judge provided a detailed summary of the written records of interview and the video records of interview of the appellant[43] and a comprehensive outline of the defence evidence, including a full account of the appellant’s testimony when determining whether he had reasonable grounds to believe that the monies were the proceeds of crime.[44]  The judge also addressed the evidence of D1 and D4 as it pertained to the appellant.[45]

39.  The judge then engaged in a comprehensive discussion in respect of the evidence and submissions made on behalf of the parties.  In explaining what evidence he accepted or rejected, the judge set out his findings in meticulous detail, addressing what was known to the appellant and admitted by him in his dealings with D4.  He said:

“255. I have no hesitation in rejecting D3’s evidence and the explanations in the interviews that he registered Asia Supply Resources and opened the bank account for Joe to do business; that he lent his personal account to Joe because Joe said his major customer wanted to deposit money; and that he had no suspicion about the legitimacy of the monies withdrawn from the accounts because Joe had brought him to look at his business; he had helped Joe source goods by introducing D1 to him and Joe’s business was big.”[46]

40.  The judge did not find the appellant’s evidence credible that the monies remitted to the ASR account were payments of goods by D4’s customers or that the payment into the appellant’s personal account was a deposit from a major customer of D4.[47] He discussed at some length the reasons why he did not find credible the appellant’s evidence that he was just helping a friend and had no suspicion about the monies remitted to the two accounts. 

41.  He noted the appellant’s evidence that he did not trust D4 and was afraid he would cheat him out of his money if he invested in ASR.  He found it was inherently improbable that the appellant would register a business and open a bank account for D4 just to help a friend if he believed he might cheat him.[48] He rejected that ASR was registered to do genuine business or that there was any genuine business.  He said:

“268. I find the evidence that D3 registered Asia Supply resources and opened the bank account because D4 was a foreigner, who had no proof of address and therefore could not open a bank account; that D4 took D3 to a container depot before and after the bank account was opened to see the business and that D4 had a lot of business, was entirely contrived in an attempt to show that the registry of Asia Supply Resources and the opening of the bank account was for genuine business and that the personal account was used for genuine business.”[49]

42.  The judge also rejected the evidence of D1 and D4.[50]

43.  As to the issue of whether the appellant had “reasonable grounds to believe” that he was dealing in the proceeds of crime, the judge concluded:

“Reasonable grounds to believe

278. By registering Asia Supply Resources and opening the bank account for Joe (Okafor Joek Kingsley) to use, D3 concealed the true holder of the account and the recipient of the monies remitted to the account.

279. I am satisfied so I am sure by transferring monies to the accounts of D1; Grace Garcia Casia (PW4); Julius Sendegeya and Chan Wai Kin, the only inference to draw is that these transfers were to conceal and disguise the true recipient of the monies passing through the account.

280. By allowing D4 to use his personal savings account D3 concealed the true recipient of the monies deposited in the account.

281. As the Court of Appeal observed in HKSAR v Wong Chor Wo & another at para 108:

‘In the normal course of events, if a man allows another person to use his bank accounts to deposit and withdraw funds, in the absence of evidence to the contrary, the inevitable inference will arise that the holder of the bank account has reasonable grounds to believe that the funds passing through the account represent the proceeds of an indictable offence.’

Asia Supply Resources

282. Having regard to all the circumstances, including:

(a) D3 did not report to the Inland Revenue Department any income for himself or on behalf of Asia Supply Resources for the period 1 April 2011 to 31 March 2015;

(b) D3 did not have any real property;

(c) D3 registered Asia Supply Resources and opened the bank account for Joe to use thereby concealing the true holder of the account and the recipient of the monies remitted to the account;

(d) shortly after the remittances were credited to the account D3, on the instructions of Joe, issued cheques transferring the monies; and

(e) the inherent improbability that buyers of goods would in the normal course of business remit payment for goods to a company who they had no dealings with,

I am satisfied so I am sure the only inference to draw is that D3 together with Joe had reasonable grounds to believe the monies deposited in the account, in whole or in part, directly or indirectly, represented the proceeds of an indictable offence and that anyone looking at those grounds objectively would so believe.

…

Personal savings account

284. Having regard to all the circumstances, including:

(a) D3 did not report to the Inland Revenue Department any income for himself or on behalf of Asia Supply Resources for the period 1 April 2011 to 31 March 2015;

(b) D3 did not have any real property;

(c) D3 allowed Joe to use the account thereby concealing the true recipient of the deposit of $523,382.67, which shortly after D3 withdrew and gave to Joe; and

(d) the inherent improbability that a buyer of goods would in the normal course of business remit payment for goods to a personal savings account of someone they did not know and who they had no dealings with,

I am satisfied so I am sure the only inference to draw is that D3 together with Joe had reasonable grounds to believe the deposit of $523,382.67 in whole or in part, directly or indirectly, represented the proceeds of an indictable offence and that anyone looking at those grounds objectively would so believe.”^[51]

The appellant’s submissions

44.  Mr Beel submitted the judge’s reasoning was flawed as there was no evidential foundation for making a finding as to the circumstances of the remittances from the buyers to the accounts.  Mr Beel argued the “reality is that person or persons had nevertheless transferred money to the account irrespective of the nature of the account or in having no previous past dealings”.^[52]

45.  He argued that there was no relevance, nor should any weight be given to the judge’s findings for Charge 5 of (i) the appellant not reporting to the Inland Revenue Department any income for himself or on behalf of ASR; (ii) the appellant not having any real property; and (iii) the inherent improbability that buyers of goods would remit payment to a company with which they had no dealings. 

46.  Mr Beel submitted the position was the same for Charge 9.^[53]  He particularly emphasised the judge’s finding that the appellant had not registered any tax returns from 1 April 2011 to 31 March 2015, taking issue with the fact that the non-filing of tax returns took place prior to 17 September 2012 (the date “on or about” which the conspiracy in Charge 9 was alleged to have taken place).  He argued that, before the judge could make a finding that the appellant concealed who the true beneficiary was, “any other explanation for the lie/deceit had to be properly considered and rejected”.^[54]  He suggested, other than being able to earn interest off the principal, there was no benefit to the appellant in having the money deposited in his account.  As there was no benefit, the explanation offered by the appellant that he was doing so simply to help a friend remained a viable possibility.  He noted that the appellant, in his video record of interview, stated he had declined D4’s offer to invest money in the business for two reasons.  Firstly, “he didn’t believe in those black guys”, and secondly “he didn’t have the money”.^[55]  When asked by the judge about this he said he might have been tricked out of his money. 

47.  Accordingly, Mr Beel argued that there was no contradiction in a person declining to put money into a business because “he is wary of losing money but helping that same person set up the business without any personal financial risk because he is a friend.  Further, his explanation that he didn’t have the money was a reasoned and viable explanation”.[56]

48.  Finally, Mr Beel contended that the judge did not address the “simple question”, which was “why would the appellant, at this time in his life, embark on such criminal conduct where there was no evidential basis to show any benefit to the appellant.”^[57]

The respondent’s submissions

49.  Ms Samantha Chiu, for the respondent, referred to the Court of Final Appeal decision in HKSAR v Harjani Haresh Murlidhar,^[58] where the Court reformulated the test for “reasonable grounds to believe”.  The Court considered that the judgments in HKSAR v Pang Hung Fai^[59] and HKSAR v Yeung Ka Sing Carson^[60]merited clarification and explained the test that should be applied:

“26. … We remain of the view that the Seng Yuet Fong test correctly represents the law. In the interests of clarity, however, we would reformulate the test as follows

(i) What facts or circumstances, including those personal to the defendant, were known to the defendant that may have affected his belief as to whether the property was the proceeds of crime (‘tainted’)

(ii) Would any reasonable person who shared the defendant’s knowledge be bound to believe that the property was tainted?

(iii) If the answer to question (ii) is ‘yes’ the defendant is guilty. If it is ‘no’ the defendant is not guilty.”^[61]

50.  The Court under question (i) explained the test is subjective only in so far as it requires the tribunal to make findings as to the knowledge of the defendant at the time of the relevant transaction.  And that, where, as here, the defendant gives evidence of the facts or matters which affected his belief about the nature of the property “the court has to decide whether he is, or may be, telling the truth about the existence of these facts and matters”.^[62]

51.  Under question (ii) the test is objective and requires the tribunal to take into account the facts or matters that the defendant claims affected his belief and consider whether a reasonable person with knowledge of those facts and matters would have believed that the property was tainted.

52.  The Court advised caution where the defendant gives evidence as there were two interrelated questions: (i) is the defendant telling the truth when he says that he did not believe that the property was tainted; and (ii) could a reasonable person in the position of the defendant have failed to believe that the property was tainted?

53.  In explaining the application of the objective test, which requires a court to make findings as to the knowledge of the defendant, the Court stressed:

“56. What this Court was emphasizing at [119] of Carson Yeung was the need to apply the test of ‘reasonable grounds to believe’ from the viewpoint of the defendant, having regard to all the facts and circumstances known to him, and not from the viewpoint of an objective bystander considering simply the adverse inferences to be drawn from the details of the transaction itself. This Court was certainly not intending to indicate that the defendant was entitled to be acquitted if he believed, or may have believed, that the property was not tainted, where he did not have reasonable grounds for such belief.

57. Once the court has determined, having due regard to the defendant’s evidence if he has testified, what facts and matters affected, or may have affected, his belief as to whether or not the relevant property was tainted, including any facts or matters that may have led him to form personal beliefs, perceptions or prejudices, the court must then ask the objective question of whether, any reasonable person, affected by all those facts and matters, would have been bound to conclude that the property was tainted.”

54.  The judge in the present case did not have the advantage of the guidance in Harjani as that decision had not been handed down when he gave his verdict.^[63]  However, the judge relied on the test as laid out in Carson Yeung and Pang Hung Fai.  He therefore reminded himself in the following terms:

“In deciding whether the defendant had reasonable grounds to believe the applicable standard is would those grounds lead to the belief and not could those grounds lead to the belief and in determining this the defendant’s belief, perception or prejudice are to be considered and given such weight as is warranted.”^[64]

55.  Relying on these principles, Ms Chiu noted that in so far as question (i) is concerned, the judge rejected the exculpatory explanations of the appellant, and correctly reminded himself that the burden remained on the prosecution.  She submitted the judge then looked to the prosecution evidence to ascertain what facts and circumstances were known to the appellant.

56.  Ms Chiu submitted that when the judge addressed the element of “reasonable grounds to believe”, he explained he had taken into account all the circumstances, which included the factors in paragraph 282(a)-(e).  She submitted that these factors were directed to what facts and circumstances were known to the appellant at the material time which would have affected his belief. 

57.  As for paragraph 282(a) and (b), she submitted that it showed the appellant was a person of modest means as disclosed by his lack of taxable income and ownership of any real property.  In these circumstances, he must have appreciated that the sum of $7.6 million was substantial and had nothing to do with him.[65]

58.  As for paragraph 282(c), she submitted that it reflected the judge’s previous findings in paragraphs 278 to 280 and that the appellant must have been aware that the arrangement concealed D4 as the beneficiary of the account.[66].

59.  As for paragraph 282(d), it showed that the account was used as a repository and conduit for the movement of funds.[67] 

60.  Ms Chiu submitted that, in the absence of any evidence to the contrary, a reasonable person, being aware of these facts and circumstances, would have believed that the sum of about $7.6 million, deposited in the account of ASR in Charge 5, was tainted.  This she said effectively answered question (ii). 

61.  Ms Chiu addressed paragraph 282(e) separately.  In this paragraph the judge considered it inherently improbable that buyers of goods would not, in the normal course of business, remit payment to a company with which they had no dealings.  She submitted that this went to the issue as to what was known by the appellant that may have affected his belief as to the transactions taking place.  She noted that D4 did not do business in the name of ASR and therefore it begged the question why would an overseas buyer of goods remit payment intended for D4 to ASR with which they had no dealings.  She stated that the suggestion that there was a genuine business in existence through ASR having been rejected by the judge, meant this was not a fact or circumstance accepted by him as something known to the appellant at the material time and therefore did not necessarily go to the issue of the applicant’s “reasonable grounds to believe”.  We have difficulty with this submission, as it was plain from the judge’s findings that the appellant would have known that ASR was not engaged in any business, or at least he would have been aware of the real circumstances of ASR given his intricate involvement in the financial transactions that took place through the ASR account. 

62.  In respect of Charge 9, Ms Chiu made the same points as she did for Charge 5.  As for paragraph 284(a) and (b), it showed that the appellant was a person of modest means, who would have appreciated that the sum of $523,382.67 was a substantial amount of money which had nothing to do with him.  As for paragraph 284(c), the deposit and withdrawal of the money through the appellant’s personal account concealed D4’s connection to the funds.  She submitted that a reasonable person knowing these facts and circumstances would have believed that the funds were tainted.  She treated paragraph 284(d) separately, but as we explained in addressing her submission in respect of Charge 5, we are of the view that it was a relevant consideration as it went to the appellant’s general appreciation of how business is conducted given he was a retired businessman. 

63.  Ms Chiu submitted that the mention of ASR in paragraph 284(a) may seem not to be relevant because the date alleged in Charge 9 was on or about 17 September 2012, whereas ASR was registered on 26 October 2012 and therefore was not then in existence.  However, she did accept that paragraph 284(a) reflected that the appellant was of modest means, in that he did not declare any income or have any property in the period from 2011 to 2014, which included the date of the conspiracy in Charge 9.

Discussion

64.  Mr Beel’s complaint about the appellant’s conviction on Charges 5 and 9 was that the judge did not properly address in his reasons for verdict the mental element of “reasonable grounds to believe”.

65.  Before we turn to address this ground of appeal, it is appropriate to refer to the formulation by the Court of Final Appeal in Harjani of the test for the offence of money laundering in respect of the subjective element, which focuses on what facts and circumstances were known to the defendant that might have affected his belief as to whether the property was the proceeds of crime.  The objective element focuses on whether a reasonable person armed with those facts and in those circumstances would be bound to believe that the property was the proceeds of crime.[68]

66.  The judge in his reasons for verdict commenced his analysis of the evidence by noting that it was not in dispute that the transactions as alleged by the prosecution took place in relation to the two accounts in Charges 5 and 9 respectively.  He went on to provide an overview of both the prosecution case and the defence case as well as an extensive review of the evidence.  He then turned to address the evidence on the issue of “an agreement to deal with property”, which he did by examining the transactions that took place in the two accounts.  At the conclusion of this process, he was satisfied on the evidence that the only inference to draw was that the appellant agreed with D4 to deal with the monies as alleged.[69]

67.  The judge next considered the element of “knowing or having reasonable grounds to believe” by extensively addressing the evidence as presented by the prosecution and the defence on this issue.  There was no dispute as to the transactions that took place in relation to each bank account.  It was the appellant’s case that the transactions through the ASR account, which he set up and registered, were done to help out D4 and in accordance with his instructions.  The transactions through his personal account were done by him to also help out D4, whom he considered a friend.

68.  It is appropriate to bear in mind that the transactions that took place in relation to the ASR account concerned 8 inward remittances from 7 to 31 December 2012 in the sum of about $7.6 million and the withdrawal of those funds from 10 December 2012 to 7 January 2013, with 11 cheques in a total sum of about $5.3 million made payable to D1, whom the appellant introduced to D4.  The appellant held the chequebook of ASR, and wrote and signed the cheques in question, on D4’s instructions.[70]  The appellant claimed that he introduced D1 to D4 to assist him in purchasing products from mainland China.  D1 was a taxi driver at the relevant time, who claimed that he received the funds because he believed the appellant was in a trading business with D4. However, D4 claimed he had never requested the appellant to register ASR and open a bank account, nor did he ask the appellant to receive and transact the monies on his behalf. 

69.  Having rejected the evidence of the appellant as well as D1 and D4, the judge went on to analyse the evidence as to whether he could be satisfied to the requisite standard that the appellant had reasonable grounds to believe that he was dealing in the proceeds of crime.

70.  The judge found that the appellant, by registering ASR and opening a bank account for D4 to use, had concealed the true holder of the account and the recipient of the monies remitted to the account.[71] He also found that the appellant by allowing D4 to use his personal savings account had similarly concealed the true recipient of the monies deposited into the account.[72]  He was guided by this Court’s observation in HKSAR v Wong Chor Wo and Another[73]that when a person allows another person to use his bank account to deposit and withdrew funds it puts the account holder on notice that it is prima facie money laundering.

71.  After analysing the evidence, the judge addressed the ultimate question of whether the appellant had reasonable grounds to believe that the monies in question were the proceeds of crime.  He explained that, “having regard to all the circumstances”, including the particular matters he mentioned, he was satisfied that the only inference to draw was that the appellant together with D4 had the requisite reasonable grounds to believe that the monies in Charges 5[74] and 9[75] were the proceeds of crime.

72.  The conspiracy under Charge 9 was the first in time.  It was alleged that on 17 September 2012, the appellant allowed D4 to use his personal account to launder $523,382.67.  This was about six weeks before the appellant registered ASR as a business on 26 October 2012 and opened a bank account under the business name on 31 October 2012. 

73.  The conspiracy under Charge 5 was alleged to have occurred between a date unknown in December 2012 and 21 January 2013, which covered the period of the financial transactions of the monies that were deposited and withdrawn from the ASR bank account.  One of the matters the judge mentioned was that the appellant registered ASR and opened the bank account for D4 to use thereby concealing the true holder of the account and the recipient of the monies remitted to the account.[76]  Whilst the act of the appellant registering ASR and opening up a bank account under its name was outside the charge period, it was relevant evidence to prove the conspiratorial agreement to commit the offence of dealing in the proceeds of crime.[77]  The same reasoning applies to subsequent events, such as the failure to file tax returns, that may also be relevant to prove the conspiratorial agreement.

74.  The judge analysed at length the appellant’s evidence and why he rejected his exculpatory explanations.  He also explained why he did not accept ASR was set up for a legitimate business purpose, and the appellant’s belief that he was only lending his account to D4 for him to receive payments for goods from overseas customers.  The thrust of the defence case was that the appellant, an experienced businessman, allowed himself to be a party to a fraud on the Inland Revenue Department and the Nanyang Commercial Bank by D4, whom he did not know well and of whom he was commercially wary.  However, the appellant did not query or question the underlying reasons for D4 needing his help and the manner in which he was to provide it.  It is understandable why the judge did not accept the appellant’s exculpatory explanations.

75.  On the issue of the subjective element of the test the judge did not misdirect himself, and clearly took into account the relevant facts and circumstances that might have affected the appellant’s belief as to whether the funds in question were the proceeds of crime.  The judge explained that, when he drew the inference that the appellant had reasonable grounds to believe that the monies in Charges 5 and 9 were the proceeds of crime, he did so having “regard to all the circumstances”, which included the matters he emphasised.  There were other matters he set out in his analysis of the evidence, such as the appellant’s dealings with and concerns about D4.  Of particular relevance was the fact that he rejected the appellant’s evidence that he believed D4 was genuinely dealing with overseas customers.

76.  When the judge drew the inference of guilt in respect of Charge 9 in paragraph 284, he explained he did so having regard to all the circumstances, which was a reference to his previous findings.  He also mentioned that this included certain matters which he listed.  One of which was “(a) D3 did not report to the Inland Revenue Department any income for himself or on behalf of Asia Supply Resources for the period 1 April 2011 to 31 March 2015”.  Whilst the reference to ASR would appear to have no specific relevance to Charge 9, it was relevant that during this period he was a person of modest means.  Whilst Charge 9 concerned only one payment, he would have appreciated given his financial circumstances that it was a substantial payment.  We are satisfied that on the evidence the judge properly drew the inference of guilt against the appellant on this charge.

77.  The judge having rejected the appellant’s exculpatory explanations of his conduct was faced with the fact that the receipt and dealing of remittances into the two bank accounts readily proved that the appellant was actively involved in the transactions.  In our judgment, the judge was plainly concerned with the facts and circumstances that were known to the appellant which might have affected his belief as to whether the funds in Charges 5 and 9 were the proceeds of crime.  He comprehensively addressed these matters when applying the objective element of the test.

Conclusion

78.  For the reasons given, we dismissed the appellant’s appeal against conviction.

[1] HSKAR v Man Yiu Pun, unrep., CACC 198/2018, 21 May 2020, at [38] per McWalters JA.   

[2] Amended Perfected Grounds of Appeal, 5.

[3] Appeal Bundle (AB), 4.

[4] AB, 6.

[5] Reasons for Verdict, at [1]-[14], AB, 44-47.

[6] Admitted Facts, at [5], AB, 28.   

[7] Admitted Facts, at [5], AB, 28.   

[8] Admitted Facts, at [9], AB, 29.

[9] There were 11 cheques in respect of D1’s account totalling about HK$5.3 million; 1 cheque to “Chan Wai Kin” in the sum of HK$300,000; 2 cheques to “Sendegaya Julius” totalling HK$700,000; two cheques to the account of Casia Grace Garcia totalling HK$410,000 and another cheque to a different account of Casia Grace Chan in the sum of HK$240,000. See Prosecution Closing Submissions, at [49 (d)], AB, 485.  

[10] Prosecution Closing Submissions, at [65], AB, 488.

[11] Admitted Facts, at [33], AB, 36.   

[12] Admitted Facts, at [31], AB, 36.

[13] Admitted Facts, at [33], AB, 36.   

[14] Admitted Facts, at [12], AB, 30.   

[15] Admitted Facts, at [15], AB, 30.

[16] Admitted Facts, at [16], [17], [19], [20] and [21], AB, 30-31.   

[17] Prosecution Closing Submissions, at [53], AB, 486.

[18] Prosecution Closing Submissions, at [54], AB, 486.

[19] Prosecution Closing Submissions, AB, 488-490.

[20] Defence Closing Submissions, at [23], AB, 520.   

[21] Defence Closing Submissions, at [32], AB, 522.

[22] Reasons for Verdict, at [271], AB, 125; at [195], AB, 108; and at [197], AB,108.  

[23] The appellant’s first written record of interview dated 3 May 2013 (exhibit P11); the second written record of interview dated 21 August 2013 (exhibit P13), and the two video recorded interviews dated 7 November 2013 and 29 August 2014, exhibits P13A and P14A, respectively.   

[24] Reasons for Verdict, at [200], AB, 109.   

[25] Reasons for Verdict, at [175(d) and (f)], AB, 95 and 96.

[26] Reasons for Verdict, at [175(g) and (h)], AB, 96.   

[27] Reasons for Verdict, at [175(k)], AB, 97.

[28] Reasons for Verdict, at [175(m)], AB, 97.   

[29] Reasons for Verdict, at [210], AB, 111.   

[30] Reasons for Verdict, at [183], AB, 105.   

[31] Reasons for Verdict, at [203], AB, 110.   

[32] Reasons for Verdict, at [175(p)], AB, 97.   

[33] Reasons for Verdict, at [175(r)], AB, 98.

[34] Reasons for Verdict, at [175(s)], AB, 98.   

[35] Reasons for Verdict, at [175(t)], AB, 98.   

[36] Reasons for Verdict, at [175(z)], AB, 99.

[37] Reasons for Verdict, at [223], AB, 114.

[38] Reasons for Verdict, at [218], AB, 113.   

[39] Reasons for Verdict, at [215]-[218], AB, 113.

[40] Reasons for Verdict, at [175(ll)], AB, 101-102.

[41] Reasons for Verdict, at [175(mm)], AB, 102.   

[42] Reasons for Verdict, at [246-250], AB, 119-120.   

[43] Reasons for Verdict, at [175], AB, 95-102.

[44] Reasons for Verdict, at [190]-[225], AB, 106-115.

[45] Reasons for Verdict, at [226]-[250], at 115-120.

[46] Reasons for Verdict, at [255], AB, 121-122.

[47] Reasons for Verdict, at [256]-[265], AB, 122-124. 

[48] Reasons for Verdict, at [266]-[267], AB, 124. 

[49] Reasons for Verdict, at [268]-[269], AB, 124-125.

[50] Reasons for Verdict, at [226]-[250] and [273]-[277], AB, 115-120 and 126-127 .

[51] AB, 128-130.   

[52] The Appellant’s Written Submission, at [28].   

[53] The Appellant’s Written Submission, at [37] and [38].   

[54] The Appellant’s Written Submission, at [29].   

[55] The Appellant’s Written Submission, at [33].   

[56] The Appellant’s Written Submission, at [35].

[57] The Appellant’s Written Submission, at [39].   

[58] HKSAR v Harjani Haresh Murlidhar (2019) 22 HKCFAR 446.

[59] HKSAR v Pang Hung Fai (2014) 17 HKCFAR 778.

[60] HKSAR v Yeung Ka Sing Carson (2016) 19 HKCFAR 279.

[61] Reasons for Verdict, at [26], AB, 464.   

[62] Reasons for Verdict, at [27], AB, 465.

[63] The decision of Harjani was handed down on 5 December 2019, whereas the Reasons for Verdict were handed down on 31 May 2018.   

[64] Reasons for Verdict, at [20], AB, 50.

[65] Reasons for Verdict, at [282(a) and (b)], AB, 128.

[66] Reasons for Verdict, at [282(c)], AB, 128.

[67] Reasons for Verdict, at [282(d)], AB, 128.

[68] Harjani, at [27]-[30], [56] and [57].

[69] Reasons for Verdict, at [182] (Charge 5) and at [188] (Charge 9), AB, 104 and 106.

[70] Reasons for Verdict, at [175(bb)-(ee)], AB, 100. 

[71] Reasons for Verdict, AB, at [278]-[279].

[72] Reasons for Verdict, AB, at [280].

[73] HKSAR v Wong Chor Wo and Another, unrep., CACC 314/2006, 16 June 2008.

[74] Reasons for Verdict, AB, 128-129.

[75] Reasons for Verdict, AB, 129-130.

[76] Reasons for Verdict, at [282], AB, 128.

[77] Prosecution Closing Submissions, AB, 504.  See Harjani, at [104].