HKSAR v. CHEUNG KWAN PO

DCCC 110/2024

[2024] HKDC 2039

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 110 OF 2024

________________________

________________________

________________________

REASONS FOR SENTENCE

________________________

The defendant pleaded guilty to a charge of "Conspiracy to deal with property known or believed to represent proceeds of an indictable offence". In short, he gave his bank account to someone.

Summary of Facts

2.  On 27 March 2021, the defendant opened a bank account (No.01270620195474)  with the Bank of China (Hong Kong)  Limited ("the BoC Account").  It was held in his sole name and he was the sole signatory.

Phone deception

3.  On 9 April 2021, Madam Shek (PW1)  received a phone call from unknown persons claiming to be mainland public officials and accusing her of engaging in money laundering activities in the mainland.  As a result, funds were transferred out of her bank account; and out of which, a total sum of $700,000 was remitted to the BoC Account by 2 transactions.

Deposits and withdrawals

4.  Between 31 March and 9 April 2021, the BoC Account received a total of 19 deposits, which aggregated to a sum of $4,731,108.01.  A total sum of $4,731,097.50 was withdrawn by 92 transactions.  Fund flow analysis of the BoC Account showed that multiple deposits were made to the account within a day.  The funds deposited were then withdrawn shortly afterwards and the daily balance of the account was low.

Arrest and admissions

5.  On 7 September 2022, the defendant was arrested for the offence of "Obtaining property by deception".

6.  In his video recorded interview, the defendant admitted having opened the BoC Account pursuant to an agreement with an unknown person made on 23 March 2021.  As part of the agreement, the defendant surrendered the BoC Account to other unknown persons whom he met in a Telegram chat group.  In return, he received $7,000.

7.  The defendant now admits that during the offence period, he conspired with other persons unknown to deal with the total sum of $4,731,108.01 held in the BoC Account, knowing or having reasonable grounds to believe that the said sum, in whole or in part, directly or indirectly, represented the proceeds of an indictable offence.

Mitigation & Sentence

8. The defendant is almost 25 and single. He has a clear record. Defence counsel Mr. Lai informed me that the defendant resides with his parents and elder sister. He currently works as a pastry chef earning $17,000 per month. Prior to this case, he was a security guard.

9. In mitigation, Mr. Lai submitted that the defendant has been suffering from diabetes since he was 16. He has follow-up medical appointments once every few months. His father is also diabetic. Shortly before this case, the defendant's father broke his shoulder in an accident and required surgery. In order to fund his father's surgery, the defendant foolishly accepted the "offer" to earn some quick money. A bundle of mitigation letters was placed before me; their contents are duly noted. Regarding the defendant's letter which mentioned that he was held up in a hotel room for about a fortnight in relation to some cryptocurrency matters, Mr. Lai explained that there was no issue of duress. Notwithstanding such unpleasant circumstances, the defendant voluntarily surrendered the BoC Account to the dubious people in order to earn his reward.

10. The prosecution has applied for an enhanced sentence pursuant to section 27(2)(c)  and (d)  of the Organized and Serious Crimes Ordinance (Cap.455)  on the basis of prevalence as well as the nature and extent of harm caused to the community.

11. I bear in mind the Court of Appeal's decision in HKSAR v Xu Mai Qing CACC 464/2005, whereas Yeung JA (as he then was)  held "Under section 27(11)  of OSCO, what the prosecution has to prove is the prevalence of the offence, not the increase in the number of such offences[1]."

12. I have read the witness statement of CIP Li dated 8 October 2024. I am satisfied that in 2021, money laundering cases were prevalent in Hong Kong in terms of the number of cases as well as the total value of monetary loss.

13. There is clear and cogent evidence before me that money laundering by bank accounts opened by "ML Stooges" is still widespread and commonly being practised in Hong Kong today. What true criminals need are gullible scapegoats like the defendant who would take the blame for them when the law enforcement takes action. The court must send a clear message to the general public that people who play the role of "ML Stooge" will receive severe punishment, so that there is a deterrent effect. When there are fewer or no willing "ML Stooges", the criminal activities which rely on their bank accounts would fail.

14. This is a typical case of money laundering by way of a stooge bank account. The defendant claimed complete ignorance of any transaction of the BoC Account (including the phone deception against PW1); however, the scam would have been meaningless without the BoC Account. Assuming what he said is true, given his role, the total sums which went through the BoC Account and the overall circumstances, I grant the prosecution's application and will enhance the sentence by 25%.

15. The Court of Appeal in SJ v Wan Kwok Keung [2012] 1 HKLRD 201 held :-

Generally, the sentence for "money laundering" offences 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.[2]

16. In determining the proper starting point, I have reminded myself of the sentencing principles laid down in HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545 and HKSAR v Boma Amaso [2012] 2 HKLRD 33. I have also borne in mind the amount of money involved, the duration of the offence, the defendant's role in relation to the movements of funds as well as his personal circumstances.

17. In SJ v Ngai Fung Sin Apple [2013] 5 HKLRD 104, Yeung V-P held :-

Generally speaking, the sentence passed in a "money laundering" case is primarily to reflect the amount of the "illicit/black money" involved. Neither the fact that the "illicit/black money"was actually not derived from an indictable offence nor the defendant's ignorance of the actual source of the "illicit/black money" is necessarily a valid mitigating factor…[3]

18. Ms. Mo for the prosecution confirmed that only the $700,000 deposited into the BoC Account[4] were related to a crime; the other deposits had no reported victims. She also informed me that of the 19 deposits made to the BoC Account, the sums ranged from $1 to $950,000; whereas the next amount higher than $1 was $10,000.

19. Hence, I accept there is no evidence in the present case showing that: (i)  except the $700,000 from PW1, the funds received by the BoC Account were related to any predicate offence; and (ii)  either the defendant was involved in or had any knowledge of any predicate offence. As the sole owner of the BoC Account, the defendant, however, should have retained its ultimate control and paid attention to its transactions on a regular basis. These were his duties and he has neglected them. I also accept that the defendant did no more than parting with his bank account and that he probably did not deal with the funds which went through the BoC Account.

20. On the other hand, I cannot overlook the fact that $4.73 million went through the BoC Account within a period of about 2 weeks. By giving his bank account to someone and thus allowing funds of unknown origins to pass through the BoC Account, the defendant played a pivotal role in helping the mastermind(s)  of criminal activities to access their illegal funds without revealing their identities.

21. In the circumstances, I adopt a starting point of 4 years' imprisonment[5]. With the timely guilty plea, the sentence becomes 32 months. I would grant an additional discount of 2 months for the defendant's predicament of being held up in a hotel room and only $700,000 were related to a predicate offence, reducing the sentence to 30 months. Apart from this, I see no other mitigating factors which warrant any further reduction. With the 25% enhancement, I sentence the defendant to 37 months and 2 weeks' imprisonment.