HKSAR v. Xiang Juan

DCCC 725/2023

[2024] HKDC 512

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 725 OF 2023

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REASONS FOR SENTENCE

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The defendant pleaded guilty to a charge of "Dealing with property known or believed to represent proceeds of an indictable offence". In short, she gave her bank account to someone.

Summary of Facts

2.On 23 August 2018, the defendant opened a bank account (No.012-590-2-005301-5)  with the Bank of China (Hong Kong)  Limited ("the Account")  by making an initial deposit of $1,000.  The Account was held in her sole name and she was the sole signatory.

Phone deception

3.In February 2020, Mr. Cheung (PW1)  received a call from an unknown person claiming to be a bank staff member promoting low interest rate loans.  The caller demanded a fee for passing the stress test.  PW1 deposited $60,000 cash into the Account on 7 February 2020.  It was a scam.

Deposits and withdrawals

4.Between 23 August 2018 and 27 November 2020, the Account received a total of 371 deposits (in the form of cash, bank transfers, ATM transfers, cheques and interest accrued)  which aggregated to a sum of $4,179,844.06 (including the $60,000 cash from PW1).  The exact amount was withdrawn within the same period by 388 withdrawals (in the form of cash, bank transfers, ATM transfers, ATM and cheques).  Most of the withdrawals were made by ATM and ATM transfers.  In respect of the $60,000 deposited by PW1 on 7 February 2020, that sum was withdrawn from the Account by 3 ATM withdrawals on the same day.

5.On 27 November 2020, the Account had a $0 balance.

6.Based on the timing and amount of the deposits and withdrawals, the Police found a "mirror transaction pattern".

7.The defendant could not be identified from the record of the Inland Revenue Department.  Land search results showed that the defendant did not own any property in Hong Kong.

8.Under caution, the defendant admitted, inter alia, that she had a flatmate named Shek Pui in the mainland in 2018.  Shek accompanied her to Hong Kong to open the Account.  She and Shek set the password for the bank card together. The defendant left the bank card at home and had never used it.  She has lost contact with Shek.

9.The defendant now admits that during the offence period, she, knowing or having reasonable grounds to believe that the total sum of $4,179,844.06 held in the Account, in whole or in part, directly or indirectly, represented the proceeds of an indictable offence, had dealt with the said sum of money.

Mitigation & Sentence

10.The defendant is 32 and single. She has a clear record. She is a mainland resident and works in Shenzhen as a fitness trainer earning RMB30,000 per month. She needs to support her parents (aged 67 and 65)  who reside at Chongqing.

11.In mitigation, the defendant explained that in 2018, her female friend Shek Pui accompanied her to Hong Kong to purchase an insurance policy. In that connection, Madam Shek asked her to open a bank account in Hong Kong to facilitate payment of the policy premiums (about RMB10,000 per quarter). The defendant claimed that she would pay Madam Shek in RMB and Madam Shek would use the Account to make payments. The Account came with an ATM card only, with no security token, passbook or online banking. She gave the ATM card to Madam Shek for good. The defendant claimed that she had put down her Shenzhen address when opening the Account; however, she did not receive any bank statements or correspondence from the bank at all.

12.The defendant said this arrangement had worked until May or June 2019 when she lent Madam Shek some money. Madam Shek did not repay her and became out of touch. Since no further payment was received, the insurance company contacted the defendant. She then began to pay the insurance company directly. The defendant admitted that she had done nothing with the Account after Madam Shek became out of touch. She did not expect that Madam Shek would use the Account for illegal activities.

13.The prosecution has applied for an enhanced sentence pursuant to section 27(2)(c), (d)  and (e)  of the Organized and Serious Crimes Ordinance (Cap.455)  on the basis of prevalence; the nature and extent of harm caused to the community; and the nature and extent of the total benefit gained by anyone from the present offence.

14.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]."

15.I have read the witness statement of CIP Yip dated 18 December 2023. I am satisfied that in 2023, money laundering cases were prevalent in Hong Kong in terms of the number of cases as well as the total value of monetary loss.

16.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. 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.

17.The defendant claimed complete ignorance of any transaction of the Account (including the phone deception against PW1); however, the scam would have been meaningless without the Account. Assuming what she said is true, given her role, the total sums which went through the Account and the overall circumstances, I grant the prosecution's application and will enhance the sentence by 20%.

18.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]

19.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 her personal circumstances.

20.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]

21.I accept there is no evidence in the present case showing that the defendant was involved in or had any knowledge of any predicate offence (including the phone deception). I also accept that the defendant did no more than parting with her bank account and that she probably did not deal with the funds which went through the Account. Furthermore, all banking transactions seem to have taken place locally in Hong Kong.

22.On the other hand, I cannot overlook the fact that $4.18 million went through the Account within a period of 2 years and 3 months. Ms. Leung for the prosecution has informed me that only the $60,000 deposited into the Account were related to a crime. The source of other deposits is unknown. I was also told that of the 371 deposits made to the Account, the sums ranged from $500 to $100,000.

23.I accept there is no evidence in the present case showing that: (i)  except the $60,000 from PW1, the funds received by the Account were related to any predicate offence; and (ii)  either the defendant was involved in or had any knowledge of any predicate offence. On the other hand, as the sole owner of the Account, the defendant should have retained its ultimate control and should have paid attention to its transactions on a regular basis. These were her duties and she has neglected them.

24.By giving her bank account to someone (even a trusted friend)  and thus allowing funds of unknown origins to pass through the Account, the defendant played a pivotal role in helping the mastermind(s)  of criminal activities to access their illegal funds without revealing their identities.

25.In the circumstances, I adopt a starting point of 4 years' imprisonment[4]. With the timely guilty plea, the sentence becomes 32 months. I would grant an additional discount of 2 months since only $60,000 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 20% enhancement, I sentence the defendant to 36 months' imprisonment.