HKSAR v. Lam Chor Yuen and Another

DCCC 664/2022

[2025] HKDC 1232

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 664 OF 2022

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REASONS FOR VERDICT

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INTRODUCTION

1.There are originally four defendants in this case involving 15 charges of “dealing with property known or reasonably believed to represent proceeds of an indictable offence” (commonly known as “money laundering”), contrary to section 25(1)  and (3)  of the Organized and Serious Crimes Ordinance, Cap 455 (“the Ordinance”).

2.These Reasons for Verdict address only D1 and D2, who are married to each other. There are 7 charges of “money laundering” in total, (Charge 1 to Charge 7).

3.The particulars of the charges are set out in the following table:  -

4.D1 and D2 pleaded not guilty to their respective charges and proceeded to trial.

5.Most of the prosecution case was admitted pursuant to sections 65B and 65C of the Criminal Procedure Ordinance, Cap 221 (“CPO”).  The prosecution called two live witnesses: Mr Ng Kin Hang (PW27 on the witness list), Clerical Officer of the Transport Department, and Mr Lee Siu Sing (PW29 on the witness list), Treasury Accountant (“TA”)  at the Forensic Accountants’ Office of the Hong Kong Police.  PW29’s expertise was unchallenged, and his reports were admitted as Exhibits P303A/B (TA Reports Volumes I & II)  and P304 (Statement).

6.At the close of the prosecution’s case, there was no submission of no case to answer.  I found there was a case to answer in respect of all the charges against D1 and D2 and ruled accordingly.

7.D1 elected to give evidence and called 3 defence witnesses, namely Mr Andrew Cheung Lap Wai (DW2), Mr Shum Wing Fai (DW3)  and Mr Tsui Ching Wing (DW4).

8.D2 elected to give evidence and called 2 defence witnesses, namely Ms Tong Hiu Wing, Angel (DW6)  and Mr Lau Kai Ming (DW7).

PROSECUTION EVIDENCE

Admitted Facts

9.There were two sets of facts reduced into writing and admitted as evidence under Section 65C of the CPO, marked as exhibits P284 and P313 and the exhibits referred to in the Admitted Facts were produced by agreement.  Salient facts include the following:

(1)  D1 and D2 were married in Hong Kong on 28 September 2009 and are still married to each other. They resided at Flat C, 30/F, Tower 6, The Latitude, 638 Prince Edward Road East, San Po Kong.

(2)  They were arrested on 28 November 2017, and a house search was conducted on the same day.

(3)  The items seized upon the house search and later from the BOC Safe Deposit Box and HS Safe Deposit Box are not disputed.

In respect to D1: -

(4)  D1 solely held the Charge 1 Account[3]. It was opened on 2 September 2009 and D1 reported himself as a transportation worker[4].

(5)  Of the total withdrawals from the Charge 1 Account, during the charge period of Charge 1, about 38.57% were made by way of cash (HK$1,002,560)[5].

(6)  During the charge period for Charge 1, D1 owned neither any property, nor any Limited Company nor any vehicle in Hong Kong[6].

(7)  D1 did not file any tax return to the Inland Revenue Department from the tax year of 2006/2007 to 2013/2014 inclusive. For 2014/2015, 2015/2016 and 2016/2017, D1 reported to Inland Revenue Department that he had worked in the business of BB Unit Company Limited (“BB Unit”), with an annual income of HK$174,000, HK$240,000, HK$348,000 respectively in those three years. The nature of business of BB Unit was at all material times selling babies and children products[7].

(8)  Since 23 September 2014, D1 started to receive salary from BB Unit, commencing at $29,000 a month, rising by increments over the years such that in 2018 when he ceased employment, he earned $40,000 per month. His occupation was warehouse keeper[8].

In respect of D2: -

(9)  D2 did not own any landed property, save and except she was the purchaser/owner of a car parking space at “Metro Harbourview”, Tai Kok Tsui, Kowloon from 15 September 2010 to 17 December 2010[9].

(10)  D2 was the Company Secretary and a shareholder of BB Unit from 2012 to 2017, and her proportion of shares decreased from 5,000 to 3,000 out of 10,000 shares. Since 2014, D2 started to receive salary from BB Unit, commencing at HK$20,000 a month rising to HK$30,000 a month, by increments over the years. She ceased employment in 2017[10].

(11)  In filing tax returns for 2006/07 to 2009/10, the Employers’ Returns of Remuneration and Pensions of D2 show annual incomes of HK$89,311, HK$89,970, HK$92,852 and HK$93,133 in the above years. The one for April 2010 to November 2010 was HK$57,679[11].

(12)  In 2013/14, D2 reported that she had HK$2 million income for being a “Consultant - Contractual” at SBLY (China)  Productivity Limited. In 2014/15, 2015/16 and 2016/17, she reported an annual income of HK$174,000, HK$240,000 and HK$360,000 respectively as a shopkeeper at BB Unit[12].

(13)  The Charge 2 Account was opened by D2 on 13 September 2010.

(14)  The Charge 3 Account was opened by D2 on 18 August 2003.

(15)  The Charge 4 Account was opened by D2 on 14 May 2010.

(16)  D2 has a clear record in Hong Kong[13].

PROSECUTION SCHEDULE SHOWING LEGITIMATE TRANSACTIONS IN THE BANK ACCOUNTS INVOLVED

10.The Prosecution produced Schedule 1 related to D1’s account[14] and Schedule 2 related to D2’s accounts[15] showing that “the transactions in Schedules 1 and 2 which are described as legitimate are in fact legitimate[16]”.

Prosecution Schedule 1 for D1 relating to Charge 1

11.As regards Charge 1, the above-mentioned Prosecution Schedule 1 relating to D1’s case is as follows: -

Prosecution Schedule 2 for D2 relating to Charge 2

12.As regards Charge 2, the Prosecution Schedule 2 relating to D2’s case is as follows: -

Prosecution Schedule 2 for D2 relating to Charge 3

13.As regards Charge 3, the Prosecution Schedule 2 relating to D2’s case is as follows: -

Prosecution Schedule 2 for D2 relating to Charge 4

14.As regards Charge 4, the Prosecution Schedule 2 relating to D2’s case is as follows: -

Section 65B evidence

15.A series of witness statements and related exhibits were admitted under section 65B of the CPO.  These include evidence from landlords of D1 and D2’s residence[23], BOC bank staff[24], immigration[25] and tax officers[26], property and vehicle registration officials[27], and various experts such as values for luxury goods[28].  Such evidence covers areas such as residency, financial transactions, property and vehicle ownership, marriage and tax records, and the valuation of seized assets.

16.The witness statement of Mr Leung Yat-hang was read out under section 65B of the Criminal Procedure Ordinance. He stated that through a friend’s introduction, he met D1 who assisted his friend with the purchase of a luxury watch, resulting in $55,600 being deposited into D1’s bank account through five transfer deposits[29].

17.As regards D2, three witness statements taken by police, which were originally placed under unused materials, were read out under section 65B of the CPO, namely a)  Ms Lee Sze Wai[30]; b)  Ms Lee Pui Yee[31]; and c)  Mr Li Yun Cheung[32].

18.Ms Lee Sze Wai stated that D2 sold a second-hand Mercedes-Benz A250 to her and her husband through a legitimate transaction. D2 received HK$355,000[33] via cheque for the car, with all funds and ownership transfers properly documented[34].

19.Ms Lee Pui Yee, as a former accounting clerk of Tung Lee Motors Limited, a vehicle trading company stated that on 5 August 2014, D2 paid HK$560,000[35] to Tung Lee Motors Limited to purchase a Porsche Macan.

20.Mr Li Yun Cheung detailed two main transactions between Auto Station Limited and D2: a HK$700,000 refund for a cancelled car plate application in October 2011[36], and a HK$887,500 payment related to a successful car loan in December 2014[37].

PROSECUTION CASE

Against D1 and D2

21.Shortly stated, Mr Tracy, prosecuting on fiat, contends that after accounting for legitimate deposit sources, the funds processed through the four subject bank accounts during the respective periods, along with the valuables seized from the safe deposit boxes, were not commensurate with D1 and D2’s reported income, known assets, or overall financial standing.

22.D1 owned neither any property, nor any Limited Company nor any vehicle in Hong Kong.  For D2, she did not own any landed property nor any Limited company in Hong Kong at the material time, but she was the Company Secretary and a shareholder of BB Unit Company Limited since 2012.  She owned a private car worth around HK$400,000 since November 2015.  Between 2006 and 2014, there were 15 sale and purchase transactions of vehicles made by D2, six being for motorcycles and nine were for private cars.  It is submitted that for the motorcycles, it would seem D2 would dispose of them the same day, or a few days after she had purchased them.  Regarding private vehicles, it appears that D2 may have owned multiple cars during certain periods.

23.As regards Charge 1 to 3, it is the prosecution’s case that the constant pattern of withdrawal of cash soon after each deposit is a signature of money laundering.  The fact that soon after each deposit, a similarly large sum of money would be transferred out of the same account illustrates that the account was used as a temporary repository for funds flow and not for genuine savings purposes.

24.Mr Tracy further submits that, based on all the available evidence relevant to each charge, the court may properly infer that D1 and D2 either knew or had reasonable grounds to believe that, in each instance, the property referenced in the charges constituted proceeds of an indictable offence.  The opinion of the TA, who conducted an analysis of the subject bank accounts and detailed the flow of funds between those accounts and other counterparties, was also presented.

DEFENCE CASE

D1’s case

25.There is no dispute that D1 dealt with the properties related to Charges 1, 5, and 6.  It is acknowledged that he conducted transactions through his Charge 1 account and possessed $160,000 of the cash seized from his residence, as well as several luxury watches. Nevertheless, D1 maintains that all of the funds originated from legitimate sources, specifically his various occupations and profit-generating enterprises, including watch trading, currency exchange, and operating “Hoi Sum Bar (開心吧)”.

26.It is submitted that the valuables seized and the deposits in the aforesaid account were the proceeds of legitimate business activities.

D2’s case

27.Briefly stated, it is uncontested that D2 dealt with the properties related to Charges 2 to 7; however, these assets all originated from legitimate sources and none of them represented the proceeds of crime. There was absolutely no reasonable ground at all for her to believe that the properties represented the proceeds of crime.

28.It is submitted that numerous documents within the defence bundle were sourced from unused materials provided by the Prosecution, including profit tax return records of the landlords for D2's matrimonial residences, car loan agreements, insurance policies, and vehicle purchase contracts. Collectively, these materials elucidate the nature of D2’s accounts and substantiate the origins of the associated funds. All such documentation should have been within the Prosecution’s knowledge.

ISSUES

29.As said, most of the prosecution case is not challenged. Therefore, credibility and reliability of the two defendants and their witnesses are therefore the crux of the case. If the court finds that the defendant and his/her witnesses are, or might be, telling the truth about the source of the moneys, then the benefit of the doubt must be given to that defendant, in which case there would be no grounds for the defendant to believe that the moneys represented proceeds of an indictable offence.

ORAL TESTIMONY

Ng Kin Hang (PW27)

30.PW27 Mr Ng was the clerical officer of the Transport Department.  He was tendered for cross-examination by Mr Tse SC for D2.  His evidence responded to the Prosecution’s claim about six motorcycles registered under D2’s name and provided reasons for their sale within a day or a few days after purchase.  Counsel for D2 has helpfully outlined his evidence in paragraphs 32-33 of his closing submissions. 

31.In summary, PW27 stated that it is common for individuals to pursue vehicle registration marks (“VRM”)  with personal significance, such as those reflecting one’s initials or date of birth.  After buying a new or used vehicle, many people replace the randomly assigned VRM from the Transport Department with a specific or personalized designation.  Agents and dealers also handle the buying, selling, and transferring of VRMs.

32.PW27 stated that by retaining a VRM in use, owners can reassign it to another vehicle under their name within 12 months.  A retained VRM can be moved either between vehicles under the same owner or transferred with the vehicle to a new owner through sale.  To obtain a VRM from someone else, the recipient must temporarily become the registered owner of the vehicle currently bearing that VRM.

33.PW27 stated that transferring a VRM typically involves using an instrument or medium that is no longer needed after the transfer, since the VRM itself is regarded as the asset instead of the vehicle.

34.During cross-examination, vehicle registration records of motorcycles registered under D2’s name from the Transport Department were shown to PW27.  He agreed that: -

(a)  Vehicle registration records of D2’s Suzuki motorcycle PV668[38] (ownership period: 25/11/2014 - 25/11/2014)  and D2’s Honda motorcycle PV486[39] (ownership period: 22/03/2013 - 22/03/2013)  reveal instances of numerous owners owning a motorcycle for an extremely short period. These vehicles were evidently used as instruments for VRM transfers.

(b)  A record from the Transport Department[40]indicated that D2 acquired and subsequently disposed of motorcycles along with specific VRMs, which were subsequently transferred, illustrating the temporary ownership of motorcycles for VRM transfer purposes.

(c)  Vehicle register records relating to the 6 motorcycles[41] [P43, P45, P48, P51, P53, and P56] further demonstrates VRM transfers using motorcycles as instruments.

Lee Siu Sing (PW29)

35.As said, PW29 was the Treasury Accountant who prepared the TA Report which analyzed the three subject bank accounts, namely (1)  HSB HKD Savings Account [designated as LEUNG AC02 in the TA Report] concerning Charge 2; (2)  BOC HKD Savings Account [designated as LEUNG AC03] concerning Charge 3; and (3)  BOC RMB Savings Account [designated as LEUNG AC04] concerning Charge 4.

36.He testified in court, adopting his witness statement as evidence of his qualifications and expertise in the field of accountancy.  After adoption, no further question was raised by the prosecution as to his findings made by him from his analysis of the subject bank accounts.

37.There was no cross-examination of PW29 by the defence.  

DEFENCE EVIDENCE

THE EVIDENCE OF D1

38.Counsel provided a concise summary of D1’s evidence and several defence observations regarding the prosecution’s case in paragraphs 9-57 of his closing submission.  I adopt the relevant parts of D1’s evidence, with modifications where appropriate.

Personal Background of D1

39.D1 is 50 years old and married to D2.  They have two children: a 14-year-old daughter and a 9-year-old son, both of whom are currently studying in Hong Kong.  He provided cash to D2, who managed most of the family expenditure.

40.D1 began employment at a young age and later worked in several industries, such as catering, construction, and transportation.

Employment at Yau Ma Tei Fruit Wholesale Market (2009-2016)

41.D1 testified that in 2009, following his marriage and driven by the intention to achieve greater financial stability for his family, he was introduced to the Yau Ma Tei Fruit Wholesale Market (“the Fruit Market”)  through his maternal uncle, an experienced subcontractor at the Fruit Market (“咕喱頭”).  D1 assumed subcontracting duties under DW3, the principal contractor, Mr Shum Wing Fai (“Kiu Dai Fai橋底輝”), overseeing operations related to fruit unloading and distribution.

42.During examination-in-chief, D1 stated that conducting business in cash was standard practice at the Fruit Market, and his working hours were from the evening until early morning.  He stated that he primarily received cash payments from his work at the Fruit Market.  Additionally, there were occasions when others deposited funds - either as cash deposits or transfer deposits - into his Charge 1 account.  The main contractors, including DW3, typically paid him in cash, which he then used, in his capacity as a sub-contractor, to pay his workers in cash as well.  Consequently, cash deposits and withdrawals formed a significant part of the cash flow reflected in his Charge 1 account.  Certain deposits occurred during late night or early morning hours, representing wages from the Fruit Market, as business transactions predominantly took place overnight.  D1 began working in this sector in 2009.  As of 6 July 2011, the balance of the Charge 1 account was $462,638.62.

43.D1 stated that he received payments from the main contractors through his subject bank account, from which withdrawals were made to disburse wages to colleagues and for personal expenses.  Additionally, a portion of cash was retained at his residence for daily expenditures and other necessary uses.

Employment at BB Unit (2014-2018)

44.D1 stated that in August 2014, while still performing his responsibilities at the fruit market, he began working at BB Unit, a company engaged in the wholesale, retail, and online distribution of baby products such as diapers and infant formula.  He said he worked there as a warehouse keeper, earning a monthly salary ranging from HKD 29,000 to HKD 40,000 during the entire employment period[42].  His employment ended in March 2018 following the cessation of BB Unit’s operations, which occurred after the company’s bank accounts were frozen due to the current case, significantly impacting its ability to conduct online transactions.

45.D1 stated that he filed his tax return on his own initiative, as he had been paying taxes since starting work as a warehouse keeper for BB Unit.

Yields From Other Work and Investment Business

46.D1 went on to explain that there were two other income sources between 2011-2017, namely (1)  18 % commission fees he received as “lamp head (燈頭)”[43] of one “Hoi Sum Bar (開心吧)”[44] and (2)  investment into a money-exchanger named “Kam Fu Foreign Currency Shop (金庫外幣找換店)”[45].  D1 reported that he worked at Hoi Sum Bar from 2010 to 2016, earning monthly commissions ranging from several thousand dollars up to HK$60,000.  He left in 2016 after the Bar relocated from Mong Kok to Tsim Sha Tsui.  Regarding Kam Fu Foreign Currency Shop, D1 stated that this business was owned by his friend, Mr Chan Wei Ho.  D1 contributed approximately $50,000, acquiring a one-tenth share, thereby becoming a minority shareholder in Kam Fu Foreign Currency Shop.  

D1’s Watch Collection Transitioning into a Business

47.D1 testified that upon entering the Fruit Market industry in 2009, he observed colleagues and peers possessing Rolex watches, which led him to develop an interest in collecting Rolex timepieces up until his arrest in 2017.  He stated that he had three reasons for purchasing Rolex watches: (1)  personal retention; (2)  appreciation; and (3)  investment speculation.  He identified himself as both a user and a trader of Rolex timepieces.  D1 testified that he only purchased his watches from Bocheer Watch & Jewellery Ltd (“Bocheer”)  (寶翠珠寶鐘錶有限公司)  in Kowloon City via Mr Tsui (DW4).  He typically sells one or more watches he previously owned, adds some cash, and acquires a watch of higher value.  This process decreases the amount of cash required for his watch purchases, as many of the watches he owns have increased in monetary value.  He could enjoy such appreciation by selling them and trading for more expensive ones.  Therefore, he did not make his purchases only by cash but also frequently swapped and traded his watches. His watches are essentially his lock, stock and barrel.

48.The evidence provided by D1 regarding the origin and purchase price of the watches was summarized as follows:

DEPOSITS AND WITHDRAWALS OF THE CHARGE 1 ACCOUNT

(a)  Cheques and Deposit from Mr Andrew Cheung Lap Wai (DW2)

49.D1 said he met DW2 in a garage around 2010, where DW2 expressed interest in buying D1’s car registration (ER1113).  D1 declined, but they became friends afterward.  Subsequently, D1 facilitated the introduction of Mr Luk Kin Wai to DW2 for the purpose of arranging a transaction involving a Mainland-Hong Kong cross-border vehicle licence, for which D1 received a 10% commission from DW2 upon successful completion of the sale.  D1 stated he received HK$178,000 from DW2 through three cheques and one ATM transfer[46] as commission for a RMB1.5 million deal, equivalent to RMB150,000[47].  

(b)  Remittance of Funds for Mr Lo Kwei Tang Reymont

50.D1 gave evidence that there were two transfers, respectively $24,630.54 and $24,600[48] and 15 cheques[49] from one Mr Lo Kwei Tang Reymont.  Mr Lo who was the son of D1’s nanny, subsequently passed away due to bone cancer in 2018[50].  According to D1, he received these sums of money from Mr Lo in order to help Mr Lo transfer RMB to his girlfriend in China.  For the initial two transfers, D1 personally carried RMB20,000 to Mainland China on two occasions.  Subsequently, D1 utilised remittance services provided by “Kam Fu Money Exchanger,” an establishment operated by acquaintances of D1, with D1 later becoming a minor shareholder in the business in 2014.

(c)  Transfers to Chan Ka Tat (012-683-1-004423-6)  and Yin Jai “賢仔” (012-581-1-019686-0)

51.D1 said in court that he made these transfers to sub-contractors in the Fruit Market Business due to a shortage of workers for unexpected tasks, making payments into their accounts for their help.

(d)  Cash Deposits and Subsequent Withdrawals

52.D1 explained that the majority of deposits into his account came from legitimate sources, such as his salary, commissions from Mr. Cheung Lap Wai Andrew, funds for remittance on behalf of Mr. Lo Kwei Tang Reymont, payments for transport work, insurance claims, and watch sales. Additional smaller deposits were attributed to fruit market wages and other counterparties,

MR ANDREW CHEUNG LAP WAI (DW2)

53.In summary, DW2 testified that he is a coordinator of Tung Wing Tat (Holdings)  Co Ltd (“通榮達 (集團)  有限公司”)[51], a cross-border vehicle company owned by his father.  DW2 has worked there since 1998 until now.  He provided a comparable description of how he and D1 became acquainted.  He stated that they formed a friendship despite an unsuccessful car registration number (ER1113)  transaction, and that D1 introduced a client to DW2 for the aforesaid cross-border vehicle licence arrangement.

MR SHUM WING FAI (“橋底輝”)  (DW3)

54.In summary, DW3 testified that he has more than thirty years of experience in transportation and logistics at the Fruit Market and has had a business relationship with D1 since around 2008 or 2009.

55.DW3 stated that, as the main contractor managing the transportation and unloading of fruit consignments, subcontractors like D1 were engaged to hire and supervise workers responsible for physically unloading fruit shipments at the Fruit Market.

56.DW3 said that payments were primarily made in cash, generally settled on a nightly basis, though delays of up to one week sometimes occurred.  He confirmed that D1 worked at the Fruit Market until a major fire disrupted operations in 2016, leading to D1's departure when his uncle left the business.

MR TSUI CHING WING (DW4)

57.In summary, DW4 has worked in the timepiece industry for 60 years.  He described D1’s watch purchasing pattern, namely that he mainly purchased Rolex, either using cash or trading in cheaper ones for more expensive models.

58.DW4 also stated that over the years, D1 had bought or sold approximately 60-70 watches at Bocheer, and that some of these watches increased significantly in value, such as the Rainbow (Exhibit P104), which D1 purchased for $550,000 and was later valued at a minimum of $1.2 million. DW4 also corroborated D1’s account of the watches' origin and prices.

59.There was no cross-examination of DW4.

THE EVIDENCE OF D2

60.Counsel for D2 submitted a thorough summary of D2’s evidence in paragraphs 69-232 of his closing submission.  Additionally, detailed fund flow tables were provided, clearly illustrating all monetary transactions within the charge accounts.  I adopt the relevant parts of D2’s evidence, with modifications where appropriate.

Personal and Family Background of D2

61.D2 is 47 years old and has completed Form 5 education at an evening school.  Her father, aged 70, and her mother, Madam Chan Lai Ying, aged 69, are both retired.  Madam Chan has prior experience in the insurance industry.  D2 has three siblings: -

(a)  Leung Ka Yan: Eldest sister, aged 50, married, and residing in Spain.

(b)  Leung Kai Wai: Second elder sister, aged 49, married, and is a housewife.

(c)  Leung Ka Yin: Youngest sister, aged 44, married to a French national and residing in France.

62.D2 and D1 were married on 28 September 2009, having first become acquainted in 2005.  The wedding dinner banquet took place at the Eaton Hotel and was funded by D2, who covered the deposit of HK$49,000 as well as additional expenses, including lighting (HK$30,398), photography, make-up artist services, hair styling, and the wedding gown.  D2 stated that D1 deposited HK$15,500, $14,500, $17,000, $3,000, and HK$49,000[52] into her Charge 3 Account as reimbursement for wedding expenses. 

63.D2 stated in court that at the wedding ceremony, she and D1 received monetary gifts (“人情”)  amounting to HK$400,000 in cash and gold ornaments from relatives and friends.  She handled all the cash gifts and stored the money at home.  Subsequently, she used part of these funds along with her own money to purchase a diamond ring valued at HK$580,000 from Bocheer in 2013.  The gold ornaments were placed in the BOC Safe Deposit Box.

64.D1 and D2 have a daughter, Lam Ying Hei (Bella), currently aged 14, and a son, Lam Wai Kiu, currently aged 9. D2 organized events marking their children's milestones, including a 100-day celebration for her son and a first birthday party for her daughter.  On both occasions, gifts such as gold ornaments were given by relatives and friends, which are relevant to Charge 6.  Exhibit D2-34 shows the 100-day celebration for D2’s son, and Exhibit D2-35 shows Bella wearing the gold ornaments received at her first birthday party.

Household Roles of D1 and D2

65.D2 testified that D1 supplied household funds, while D2 handled arrangements such as rent, utilities, car loans, children's school fees, and daily expenses.  D1 initially provided between HK$20,000 and HK$30,000 per month for expenses, which later increased to HK$50,000 to HK$60,000, with occasional lump-sum contributions of up to HK$100,000 for household savings.  The payments were made in cash without a fixed schedule, and some months involved larger sums after longer intervals.

66.In certain instances, car loan repayments and deposits for vehicle purchases, such as the Porsche Macan, were made from household savings in D2’s bank accounts.  D2 stated that following marriage, the family owned a single car and only acquired a second vehicle after the birth of their son.  All vehicles were registered in her name due to her eligibility for a no-claim bonus, which resulted in a lower insurance premium.

67.D2 only drove the Mercedes Benz A250 (“JY33”), the Mercedes Benz GLA 250 (“JY33”), and the Toyota Alphard, while D1 drove all other private cars registered under D2’s name.

D2’s Knowledge of D1’s Employment and Income

68.D2 said when they married in 2009, D2 knew D1 was a fruit market subcontractor, earning HK$80,000-100,000 monthly and working late, typically leaving at 7-8 pm and returning at 1-2 am.

69.D2 said D1 also received commission as a bar promoter (“燈頭” in Cantonese)  in addition to his main income from the fruit market.  He was later paid for his work at BB Unit Co Ltd following D2’s investment in the company in 2014.

70.Additionally, D1 participated in watch trading with D2 and earned profits from this activity over several years.

Work History of D2

(1)  Property Agent Experience

71.D2 reported that she commenced employment at age 16 and maintained consistent roles across sectors such as property agency, fashion retail, and hospitality.  Her initial positions enabled her to earn regular salaries in addition to supplementary income from tips.

72.In 1993, D2 entered the workforce by distributing promotional leaflets for property sales at construction sites and facilitating ticketing for prepaid housing allotments.  She earned commissions ranging from 0.5% to 1% of each property's sale price, as well as remuneration for her role in securing allotment tickets.

73.In 1995, after joining Century 21 On Hing Property Consultants in Yuen Long, D2 was responsible for accompanying clients to property viewings and inspecting various properties, including village houses and villas.  Through this position, she gained experience with the procedures involved in buying and selling village houses in Yuen Long, which contributed to her initial financial success (“first pot of gold”)[53].

74.During this period, her employers submitted tax returns for her.  Her individual tax liability was below the exemption threshold.  Following the downturn in the property market during the 1997 financial crisis, D2 moved from property consultancy to retail.

(2)  Fashion Retail Exposure

75.In 1998, D2 began her career in the fashion retail sector, which fostered her interest in luxury fashion.  She was employed for two years at The Swank Shop located in Pacific Place, a retailer featuring prestigious brands such as Zegna, Ferre, and Givenchy, earning a monthly salary of HK$5,900 plus commission[54]. The employer was responsible for filing her tax return, and D2 was not required to pay taxes.

76.In 2001, she worked as a saleslady at Staccato Footwear Company Ltd in Central for six months, earning HK$7,800 plus bonus[55]. Her employer filed her tax return, and D2 did not owe any taxes.

77.Later that year, she moved to A Different Corner, selling luxury accessories such as Swarovski items, with a monthly salary of HK$5,550 plus commissions[56]. She worked there for two years.  Her employer filed tax return for her, and D2 was not required to pay tax.

78.The SARS outbreak had a considerable effect on the retail sector, leading to D2’s transition out of that industry.  In 2003, D2 took up a receptionist position at City Sauna in Jordan, where she received a fixed monthly wage of HK$6,000 along with tips shared among staff (referred to as “water money” or “水錢” in Cantonese).  Her responsibilities included coordinating masseuses and managing the sale of prepaid packages.  Additionally, her employer was responsible for submitting her tax returns, and she did not receive any tax notifications.

(3)  Employment as a Receptionist at Club Cavalier

79.D2 worked as a receptionist at the Kimberly Hotel’s Club Cavalier from 2004 to 2010 and worked from 3 pm to midnight, six days a week, earning HK$20,000-30,000 per month, including a base salary of HK$7,000-8,000, pooled tips, and private tips[57].

80.The basic salary D2 received at the Kimberly Hotel was made by monthly auto pay deposits to the BOC HKD Savings Account by “Fancy Kingdom Ltd”.

81.The company collected “water money” in cash and distributed it monthly among staff.  D2 often deposited a portion of the shared “water money” (ranging from $8,000 to $20,000)  and private tips ($1,000 to $3,000)  into her BOC HKD Savings Account, usually before the 15^th day of each month.  The amounts deposited varied.

82.D2’s role as a purchasing agent began at Club Cavalier.  In addition to her regular job duties of arranging masseuses and selling prepaid packages, D2 received private tips from customers for taking on additional tasks, including purchasing clothes and gifts on their behalf.  This laid the foundation for her later commitment as a purchasing agent, where she earned profits from the price difference.  These experiences enlightened her on the business potential of being a purchasing agent.

83.In 2009, she also started renting her personal collection of designer handbags to masseuses and colleagues, further diversifying her income.

84.She quitted her job on 9 November 2010, soon after giving birth to her daughter Bella in October 2010, as she needed to take care of her new born baby.

D2 starting her side hustles for flexibility after giving birth to her daughter

85.Following her departure from the Kimberly Hotel, D2 embarked on developing her side hustles such that she could work flexible hours.  Her sources of income included her side hustles as a purchasing agent for luxury items such as handbags, watches, and clothes, as well as watch trading and handbag rental.

Income from purchasing agent activities

86.D2 established herself as a purchasing agent, leveraging her VIP status due to volume purchases, market knowledge, and overseas connection to source luxury goods at competitive prices: -

(a)  Exclusive Discounts: D2 utilized her VIP privileges at such boutiques as TWIST, Paris Spring, Muse, and TOP 2 to obtain discounted and hard-to-find items (which were not readily available or discounted to ordinary customers). This allows her to resell at a price lower than retail but still profitable.

(b)  Diverse Sourcing Channels: D2 sourced goods from various fashion retailers and wholesalers, etc. Certain wholesale distributors offered huge discounts compared to authorized dealers.

(c)  International Sourcing: She collaborated with her younger sister, a VIP at French Hermès, to access exclusive new models and reserve handbags unavailable in Hong Kong. D2 could also avoid purchasing accompanying goods at Hong Kong Hermès which enhanced her profits. Additionally, tax refunds on European purchases further increased her profit margins.

Income from watch trading

87.D2 started developing her interest in timepieces at the age of 18 when she purchased her first Rolex watch (Model: 369)  for her 18^th birthday.

88.D2 actively engaged in watch trading, focusing primarily on Rolex models and occasionally Audemars Piguet models.  She considered herself a watch “collector”, “trader”, and “investor”.

89.D2 took a multifaceted approach to watch trading:

(1)  Sourcing for Friends: D2 bought watches from Bocheer for friends, adding a markup for profit.

(2)  Personal Investment in High-Value Watches: When D2 anticipated the potential of appreciation, she would make a purchase and wait for the opportunity to attract buyers at social gatherings by wearing it, serving as a “live advertisement” or “walking sample” to showcase the item’s appeal.

(3)  Consignment Sales: Friends like DW6 gave D2 their watches to sell, set a reserve price, and D2 added her own markup for profit.

90.D2’s involvement in watch trading was driven by several factors, including her collaboration with Bocheer (which was associated with more than 10 pawn shops as the source of pre-owned watches), high profitability, and her interest in watches.

(1)  Collaboration with Bocheer: D2 often patronized Bocheer (sometimes with D1)  and maintained a longstanding relationship with DW4. Leveraging Bocheer's competitive pricing and reliable after-sales services, D2 always bought and traded watches there.

(2)  High Profitability: D2 sold watches to friends, earning substantial profits from price differences. For example, she sold a discontinued Rolex Daytona model to her uncle DW7, at a dinner gathering in 2014, generating over HK$100,000 in profit.

91.D2 testified that she focused on trading high-demand Rolex models, which reliably held or appreciated in value.  Discontinued models brought profits of over HK$100,000 per transaction, standard Daytona models earned HK$40,000-50,000, and Submariner or GMT models yielded HK$20,000-30,000.

Income from resale and rental of designer handbags

92.D2 reported that she increased her income by renting and reselling designer handbags, using her luxury collection as a means of generating additional earnings.  Designer handbag rental deposits were paid in cash, with returns made in person after the rental period.

Other investments

93.Apart from her time deposits, she purchased a car parking space at HK$428,000 in September 2010 and sold it in around three months for HK$472,000, realizing a profit of HK$44,000[58]. Her investments played a significant role in enhancing her overall financial portfolio.

The “First Pot of Gold”

94.D2 testified that in 2012, she received a HK$2,000,000 consultancy fee from SBLY (China)  Productivity Limited, owned by Mr Kwan Wai Fong, whom she met in 2005 when he was a frequent customer at the Kimberly Hotel.

95.Mr Kwan, formerly of the Land Registry, later owned SBLY China Production Limited. Recognizing D2’s real estate experience, he engaged her to find partners for developing land in Fu Tei, Tuen Mun.  She succeeded and earned her “first pot of gold”.  

96.D2 reported the income to the IRD and paid tax accordingly[59]. She subsequently withdrew some from this “first pot of gold” for watch investment. 

Formal employment in recent years

97.Since September 2019, D2 has worked as a Marketing Manager at Leader Power Enterprise Ltd, earning a monthly salary of HK$60,000 supplemented by discretionary bonuses[60].

The need and habit of using cash

98.D2 did not possess a credit card and conducted payments in cash when participating in side hustle activities under the following circumstances: -

(a)  Watch shops, including Bocheer, preferred cash payments. Otherwise, 3% handling fees would be charged for payments other than cash. Thus, she used to pay in cash when she purchased watches, as 3% significantly cut into the profit margin of a luxury watch.

(b)  When she sold watches to her friends, she also received cash, as this payment method was so common in the watch trading world.

(c)  When she engaged in purchasing agent activities, such as selling branded handbags, clothes, or shoes to her friends, she also used to trade in cash, as transactions were made face-to-face.

(d)  When she rented out handbags, the payments of deposits by friends or the returns of deposits to friends were also more often made in cash as the parties needed to check the bag face-to-face.

99.For rental payments, she sometimes paid by bank transfer if the landlord had accounts in the same bank.  Otherwise, she either took cash from her reserve at home or withdrew money from her own account and deposited cash into the landlord’s bank account through a cash depositing machine (“CDM”). 

100.In some situations, there were discounts for payment in cash, such as insurance premium payments.

101.When D1 contributed monthly or lump sum household savings or expenditures, D1 also gave her cash.

102.D2 had a habit of keeping an average amount of around HK$200,000 cash reserve at home for various purposes.  Extra cash would be deposited into the bank.  She stores her cash in a mini-safe inside the larger Home Safe to keep it separate from D1’s funds.  She retains the key.  She organizes $500 and $1,000 notes into stacks of HK$10,000 each, while keeping the remaining cash in her wallet for daily expenses.

103.D2 testified that several cash deposits appeared close together on bank statements because the CDM limited the number of notes per transaction or sometimes rejected certain notes, requiring multiple deposits.

CHARGE 2 - HSB HKD SAVINGS ACCOUNT (ANNEX C)

104.D2 opened the Charge 2 Account in September 2010 to secure a larger, independent safe deposit box for luxury watch storage, prompted by a career change before her child’s birth.  Although the account was opened for this purpose, she only obtained the safe deposit box in 2017.  The account showed minimal activity until May 2011, after which it was primarily used for receiving salary, managing household expenses, and conducting side hustles such as watch trading and purchasing agent activities.  Personal spending, including clothing purchases and car loan payments, was also managed through this account.

105.The transactions are categorized and detailed in Annex C, showing the purposes of all transactions in Charge 2 Account by different colour codes. 

106.Concerning the “top 8” major deposits by counterparties identified by PW29 in the TA Report”[61], 7 out of 8 transactions have been considered legitimate by the Prosecution.

107.With respect to the sole outstanding “yet-to-be-legitimized” transaction — a cheque deposit from Lik Shing Auto Part Limited[62], dated 2 April 2015 as noted in bank statement[63]. D2 stated that the cheque made payable to her represented a refund from Lik Shing after a pre-order for a 7-seater Toyota Alphard (a parallel import vehicle)  was not successful because of an insufficient quota.

108.The major uses of the Charge 2 Account and related financial activities from 2012 to 2017 are outlined as follows: -

(a)  Home Rentals: Regular monthly payments were made for apartments at Sky Tower[64] and The Latitude[65], with amounts and periods clearly documented.

(b)  Car Parking Rentals: The account was used to pay for car parking spaces at various residences[66], with amounts ranging from HK$3,100 to HK$5,000[67].

(c)  Phone Bills: Recurring payments to CSL indicate the account was used for mobile phone bills[68].

(d)  Children-related Expenses: Covered costs for the children’s education, medical expenses (such as the son’s birth), and family activities like portrait sessions[69].

(e)  Insurance: Transactions included both deposits from insurance companies and withdrawals for premium payments to firms such as China Life Insurance and California Insurance[70].

(f)  Travel & Holidays: Payments to travel agencies and related expenses, such as holidays to Japan and family trips, were made through the account[71].

(g)  D1-related Contributions: D1’s household contributions, including advance payments for rent and car loan repayments for a Porsche Macan, were deposited and managed through this account[72].

(h)  Property Balloting: The account facilitated property purchase ballots, including cashier’s orders for deposits and refunds upon unsuccessful attempts[73].

(i)  Side Hustles: The account was used for watch trading and for acting as a purchasing agent, with transactions related to various fashion retailers and luxury brands detailed, namely Muse[74], Paris Spring[75], Ode Fashion[76], DFS Group[77] and Chanel[78].

CHARGE 3 - BOC HKD SAVINGS ACCOUNT (ANNEX A)

109.D2 opened the Charge 3 Account in 2003, using it initially for personal salary deposits and later for household expenses after her marriage in 2009.  The account activity from 2008 to 2017 reflects legitimate uses, including regular family costs, wedding and child-related expenses, watch trading, and purchasing agent activities.  The transactions are categorized and detailed in Annex A, showing the purposes of all transactions in the Charge 3 Account by different colour codes. 

110.With regard to the two remaining “yet-to-be-legitimized” transactions among the top 10 transactions by counterparties in the Treasury Accountant’s Report, 8 out of 10 transactions are considered legitimate transactions, as conceded by the Prosecution.  D2 explained the remaining 2 transactions in her unchallenged testimony.

(a)  Concerning one of those two remaining “yet-to-be-legitimized” transactions, “004-002332328-001”, which are LEUNG AC03-848 to 849 dated 26/5/2014 in the bank statement, D2 testified that the two cheques in question were related to the sale of a Mercedes Benz SUV by D1 to a car dealer.

Exhibit P303B (Page A230)

Exhibit D2-2: Transport Department records

The dates matched official records, verifying the legitimacy of the transaction.

(b)  Regarding the deposit described as “yet-to-be-legitimized” from “Lau Kai Ming”[79] dated 13 January 2014 in the bank statement, D2 testified that she attended a dinner banquet wearing a Rolex Daytona featuring a leather strap, diamond bezel, and shell dial to serve as a “walking advertisement” in hopes of finding a potential buyer. During this event, Lau Kai Ming (DW7), a watch collector and a friend of her uncle, expressed interest in acquiring the watch for his wife, as he owned a similar model himself.

Exhibit P303B (Page A229)

Exhibit D2-25

111.The following summary encapsulates the main uses and patterns of D2’s bank account activity as described in her evidence.

Household and Living Expenses

112.D2 said she used the Charge 3 Account primarily for regular household expenses — covering utilities (electricity, gas, water, telephone), rent for various residences, and parking space rentals.  Rental payments ranged from HK$4,200 to HK$12,000 per month for different apartments[80]; parking space rentals varied from HK$3,000 to HK$5,500 monthly.  She also repaid a HK$300,000 car loan in 2015-2016 for a Toyota Alphard[81].

Family and Personal Matters

113.D2 gave evidence that the Charge 3 Account was also used for family-related expenses: wedding costs[82], children’s expenses (such as maternity and birthday costs), and managing insurance for family members[83].

114.She regularly supported her mother financially, typically giving HK$5,000 a month and HK$10,000 on special occasions.

115.D1, as the main income provider, contributed HK$20,000-$60,000 per month, with occasional larger lump sums as family reserves.

116.D2 made withdrawals for the purchase of vehicles for D1, including a Mercedes-Benz ML350 and a Porsche Macan[84].

117.Travel expenses, including currency exchange and payments to travel agents were also managed through this account.

Side hustles and Investments

118.D2 said she engaged in a side hustle as a purchasing agent for luxury goods (designer handbags, watches, and clothing), profiting from her VIP status and connections.

119.D2 said she also invested in a car parking space at Metro Habourview in Tai Kok Tsui from 15 September to 17 December 2010 for short-term gain[85], selling it for HK$472,000.  On 10 November 2010, a cheque from Qian Lin Juan for HK$47,200[86], being 10% deposit for the sale of this car parking space, was deposited into this bank account.  On 23 December 2010, a cheque for HK$115,292[87] from Messrs Tang, Wong & Cheung Solicitors was deposited into the Charge 3 Account being the second deposit payment[88]. 

120.Time deposit investments were also made through the account, with large sums placed and withdrawn upon maturity[89].

Personal and Miscellaneous Expenses

121.D2’s account reflected personal expenses, such as mahjong games and daily miscellaneous purchases via EPS.  Due to the span of years involved (2008-2017), D2 could not recall every small or minor transaction.

CHARGE 4 - BOC RMB SAVINGS ACCOUNT (ANNEX B)

122.D2 opened the Charge 4 Account in 2010 at her mother’s suggestion, primarily to help manage RMB insurance premiums for her mother’s Mainland clients and as a potential investment.  D2’s mother Madam Chan was a branch manager at China Life Insurance at that time[90]. From 2010-2015, there were restrictions on direct money transfers from Mainland China to Hong Kong, so the account was used for exchanging and storing RMB.

123.The transactions are categorized and detailed in Annex B, showing the purposes of all transactions in the Charge 4 Account by different colour codes. 

124.The account’s total deposits over eight years were RMB 316,001.27, with only RMB 82,000 withdrawn on three occasions, mostly for her mother’s business trips.  By 2016-2017, the account activity was limited to bank interest payments.  The remaining balance at the time of arrest was HK$234,001.

CHARGE 5 – PROPERTIES SEIZED IN THE HOME SAFE

125.During the arrest and seizure on 28 November 2017, the police saw the Home Safe inside a bedroom.  The following items, which are the subject matters of Charge 5, were found inside the Home Safe.  It was a safe shared by D1 and D2 for keeping their properties at home, including watches, cash and certain documents.  7 watches were found inside a brown box.

126.I incorporate the evidence from D2’s closing submission as stated below.

Exhibit P102 – Rolex GMT “Pepsi” blue and red bezel black dial in white told (no diamond)

Exhibit P106 – Audemars Piguet Royal Oak Offshore Diver in stainless steel watch with green dial and green rubber strap

Exhibit P103 - Rolex GMT blue and black bezel black dial watch

Exhibit P104 - Rolex Daytona “Rainbow” watch

Exhibit P105 - Audemars Piguet gold/black strap watch

Exhibit P107 - Rolex Yacht Master watch

Exhibit P108 - Audemars Piguet silver/blue strap watch

(a)  D2’s testimony:

These watches belonged to her husband D1, not her.

(b)  D1’s testimony:

These watches belonged to him.

Exhibit P110 - HK$200,000 cash

Exhibit P109 – HK$160,000 cash

(a)  D2’s evidence:

Exhibit P109 belonged to her husband D1.

(b)  D1’s evidence:

Exhibit P109 belonged to him.

CHARGE 6 – PROPERTIES SEIZED FROM BOC SAFE DEPOSIT BOX JOINTLY HELD BY D1 AND D2

127.D2 said that the BOC Safe Deposit Box mainly stored her wedding gifts, her daughter's and son’s birthday gifts from relatives, and inherited jewellery.

Exhibit P282 – Photo album 4 (D1’s and D2’s BOC Safe Deposit Box “4325”)

Rolex warranty cards and Bocheer invoices

Subject matters of Charge 6

128.During her examination-in-chief, she was asked to identify the items to denote their ownership in different colours, which she did.

129.The following part of the evidence, as set out in D2’s closing submission, is adopted in this paragraph.

Exhibit D2-39 – Marked Photo 8 in Photo Album 4 [Exhibit P282]

•  Red circle: Belonged to D2

•  Purple circle: Belonged to her daughter, Bella

•  Blue circle: Belonged to her son

Items belonged to D2 (in red circles)

Items belonged to D2’s daughter (in purple circles)

Items belonged to D2’s son (in blue circles)

Item belonged to D1

One Raymond Weil Watch [Exhibit P167]	D2’s testimony: •  The watch did not belong to D2, her daughter nor her son (but D1). D1’s testimony: •  It is his watch.

CHARGE 7 – PROPERTIES SEIZED FROM HSB SAFE DEPOSIT BOX

130.D2 stated that after leaving Club Cavalier in 2010, she focused more on watch trading and required a larger safe deposit box.  She opened an HSB Savings Account for eligibility but remained on the waiting list until 2017.  

131.D2 said that all the watches in the HSB Savings Deposit Box were hers, with one exception (which was DW6’s, which was passed to her for sale on consignment).

132.I incorporate the evidence from D2's closing submission as stated below.

Exhibit P283 – Photo album 5 (D2’s HSB Safe Deposit Box “31180”)

Bocheer invoices

Subject matters of Charge 7

Exhibit P185 - Cartier Pasha stainless steel watch with stainless steel bracelet and white dial

Exhibit P186 – Rolex GMT Master II “Pepsi” blue and red bezel black dial white gold watch with diamonds

Exhibit P187 – Rolex Submariner with green dial and green bezel

Exhibit P188 – Rolex Daytona white gold watch with diamond bezel, diamond dial and blue leather strap

Exhibit P189 – Rolex Daytona yellow gold with green dial and yellow gold bezel

Exhibit P190 – Rolex Daytona Eternal Rose Gold Chocolate Colour Dial

Exhibit P191 – Cartier White Gold Love Bangle

Exhibit P192 – A diamond ring

Exhibit P193 to P194 – A pair of silver rings

MS TONG HIU WING, ANGEL (DW6)

133.DW6 testified that she had ever engaged D2 to source three Hermès Birkin handbags of 25 cm (in pink, black and grey)  at a price ranging from HK$80,000 to HK$120,000, three luxury watches (including Rolex and AP), a LV scarf, a pair of Balenciaga sandals and Dior lipstick.  DW6 also passed one AP Royal Oak Offshore Diver watch with green dial and green rubber strap[91] and one Rolex Daytona yellow gold watch with green dial and yellow gold bezel[92]to D2 for sale on consignment.

MR LAU KAI MING (DW7)

134.DW7 testified that he bought a discontinued Rolex Daytona from D2 at a dinner party on 12 January 2014 as a gift for his wife.  The model, featuring a leather strap, diamond bezel, diamond indices, and a shell dial, cost $500,000, a price he considered reasonable given its prior market value of around $700,000.  As a collector since 1998, DW7 confirmed his wife still owns the watch, brought it to court, and matched it with photo Exhibit D2-25.

135.DW7 recalled instructing his wife to issue a cheque in the amount of $500,000 to D2.  The cheque, dated 12 January 2014 (the date of the dinner party), was deposited into D2’s Bank of China account (the Charge 3 Account)  on 13 January 2014.  

136.He highlighted the critical role of provenance in the second-hand watch market, noting that the origin of a timepiece carries greater significance than the availability of a warranty card or receipt.  To ensure proper documentation of the seller’s identity, Mr Lau and his wife retained the cheque counterfoil, which identified “Leung Ka Kei” as the payee and included a reference to the “wife of Lam Chor Yuen” as a memory aid.  He did not need D2 to show purchase documents for the Rolex, as she was a long-time friend and he trusted his own expertise in authenticating Rolex watches.

137.When questioned about whether lacking a receipt or warranty card could affect future resale, DW7 clarified that although such documentation may moderately influence resale value, the impact is generally minimal — especially for rare or vintage Rolex models which are frequently sold at auction without supporting documents.  He further noted that valuable or discontinued Rolex watches typically maintain their value even in the absence of documentation.  

DIRECTIONS

138.I remind myself that the prosecution has the duty to prove the elements of every charge against every defendant beyond reasonable doubt. The evidence against each defendant must be considered separately and individually. Neither defendant has anything to prove. 

139.If the court is to draw any inferences adverse to the defendant, such inferences have to be the only reasonable inferences to be drawn from the evidence. The absence of reference to any specific piece of evidence or argument in my verdict should not be interpreted as an oversight or lack of consideration.

140.D2 has a clear record in Hong Kong, and this assists her in relation to both credibility and propensity.

THE LAW

141.The legal principles in relation to money laundering offences are quite settled[93]. It is not necessary for the prosecution to prove, as an element of the offence under section 25(1)  of the Ordinance that the proceeds being dealt with were in fact the proceeds of an indictable offence.

142.As mentioned, there is no dispute that D1 and D2 dealt with the monies in question.  That means the actus reus of the offence is not in issue.  As to the mens rea of dealing, it consists of two parts: “knowing” or “having reasonable grounds to believe”.  In relation to the second limb (having reasonable grounds to believe)  of the offence, the Seng Yuet Fong test[94]correctly represents the law.  The test, as the Court of Final Appeal reformulated in Harjani Haresh Murlidhar, is:-

(1)  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”)?

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

(3)  If the answer to question (2)  is “yes” the defendant is guilty. If it is “no” the defendant is not guilty[95].

143.The first question is subjective only in as much as it requires the tribunal to make findings as to the knowledge of the defendant at the time of the relevant transaction.  Where the defendant gives evidence of facts and matters that 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[96].

144.The second question is objective.  Where the court finds that the defendant was, or may have been, telling the truth about the existence of facts and matters that he claims affected his belief, and the court must take those facts and matters into account when answering the second question[97].

145.If the evidence provided by the defendant as to what he perceived and believed is accepted as true or as evidence which may be true; and if true would be inconsistent with him having reasonable grounds to believe that the property in question represents the proceeds of crime, an acquittal is called for since an essential mens rea element cannot be established against the defendant[98].

146.Where the defendant provides no evidence at all of his beliefs and perceptions etc, the Court is left to draw whatever inferences may be proper based on the prosecution’s evidence[99].

147.If the defendant does testify or call evidence as to his state of mind but is entirely disbelieved, the court finds itself essentially in the position described in the preceding paragraph.  Rejecting the defendant’s evidence does not automatically mean that he must be convicted.  It remains necessary for the court to be satisfied that the case against him has been proved beyond reasonable doubt[100].  

PROSECUTION’S CLOSING SUBMISSION IN BRIEF

148.The Prosecution reiterates that the assets of both defendants were not commensurate with their reported sources of income, and that the transaction patterns in the relevant accounts were consistent with those commonly associated with money-laundering. In the absence of an explanation these facts may give rise to the inference that both defendants knew or had reasonable grounds to believe the monies passing through their account were the proceeds of an indictable offence. A large proportion of the transactions were in cash. It is submitted that in many instances, both defendants would deposit large amounts of cash multiple times a day or within a short period of time.

D1’s CLOSING SUBMISSION IN BRIEF

149.D1 maintains that his work in the transportation and fruit market sectors explains the transactions in his bank account before 2014, and the decline in such activity after his employment with BB Unit supports this. Although he did not file tax returns for his self-employed earnings, it is submitted that this is common for cash-based local professions. D1 submits that the prosecution accepts D1’s income from BB Unit as legitimate, and there is no evidence linking him to illegal activities. Documentary evidence provided by the prosecution further supports D1’s case of having lawful income sufficient for his expenditures.

150.D1 further submits that D1’s good memory of watch prices is understandable, as collecting watches serves as both a hobby and a means of generating income or upgrading to more valuable models. This trading pattern supports his ability to maintain his lifestyle and acquire luxury watches.

D2’s CLOSING SUBMISSION IN BRIEF

151.It is contended that D2’s funds flow analysis found no evidence of money laundering, with most transactions legitimately explained. The crux of the prosecution’s case—that D2’s assets were not commensurate with her known sources of income—was not substantiated by concrete proof. It is submitted that as an ordinary housewife, D2 managed household finances and engaged in side hustles, including trading luxury watches, to supplement her family’s income. The long timeframe and minor amounts involved in many transactions made precise recollection difficult, but most were traceable and supported by documentary evidence, many originating from the prosecution’s own materials. Defence witnesses corroborated D2’s account, and evidence showed her financial activities were legitimate, with no indication of money laundering.

152.It is submitted that D2’s actions, including proactively engaging with tax authorities, reflected transparency and confidence in the legitimacy of her assets. The timeframes chosen by the prosecution lacked rationale, and certain items, like wedding gifts (龍鳳鈪)  and gifts to infants (彌月飾物), were wrongly implicated. Overall, D2 contends all funds concerned are of lawful origin, and there is no reasonable ground for D2 to believe that any funds represented proceeds of crime.

153.Counsel for D2 also criticized PW29's TA report, dated 16 August 2023, arguing that when it was prepared, the Prosecution had not yet identified all legitimate transactions listed in Prosecution Schedule 2. Most transactions were later accepted as legitimate by Mr Tracy. It follows that the “Ratio of Adjusted Total Deposits to Income” derived as “3.7” in the TA Report is bound to be inaccurate, as the legitimate transactions in Schedule 2 had not been taken into consideration at all during the analysis.

MY CONSIDERATIONS

154.I am grateful to counsel for their written closing submissions. Defence counsel has presented a notably concise submission, with particular appreciation extended to the defence team representing D2.  Leading counsel for D2, Mr Tse SC, along with Ms Wong and Ms Chan, has provided a thorough summary of D2’s evidence in his closing submissions, supported by detailed and illustrative fund flow tables outlining each monetary transaction referenced in D2’s testimony.  

155.As said, the key issue that calls for consideration and determination by this court appears to be the credibility and reliability of both defendants and their witnesses, given that the majority of the prosecution's case is not disputed. Therefore, challenging the credibility and reliability of their evidence through cross-examination is therefore of paramount significance.

156.Both D1 and D2 have elected to give evidence in the trial and given explanations. It goes without saying that the explanations provided by the defendants regarding the source of the funds are central to the case. They also called witnesses to support their cases.

157.Somewhat surprisingly, Mr Tracy, prosecuting on fiat, put little effort into cross-examining the defendants and their witnesses, leaving the defence cases unchallenged. D1 gave evidence from 4 February 2025 at 10:24am to 5 February 2025 at 11:43am while Mr Tracy’s cross-examination started on the same day at 12:25pm and finished on the same day at 3:15pm (bearing in mind that we had a lunch break from 1:00pm to 2:30pm).  For D2, she gave evidence over 4 days from 10 February 2025 at 2:41 pm to 14 February 2025 at 3:25 pm relating to the events that occurred during the charge periods. Mr Tse SC for D2 went to great lengths during examination-in-chief to establish that the monies came from legitimate source while Mr Tracy’s whole “cross-examination” only lasted approximately 1.5 hours in total. When he began to cross-examine D2, the first thing he said to D2 was: “Madam, the first thing I will do in this cross-examination, which will not be a very lengthy cross-examination, is make sure that you understand what the prosecution’s case is against you on each of the charges which you face.”.  Mr Tracy basically repeated the charge particulars, asking both defendants if they understood. There was actually no “cross-examination” of both defendants and the defence witnesses.

158.Given that the credibility of the defendants and witnesses is crucial, I find Mr Tracy had an obligation to test their truthfulness, credibility, and reliability during cross-examination, or at minimum, indicate the specific evidence with which the prosecution took issue or disagreed. I must say that, although it remains uncertain whether cross-examination would have effectively challenged the credibility and reliability of their testimony, Mr Tracy nonetheless had an obligation to do so.

159.Furthermore, Mr Tracy, in his closing submission, only made a brief summary that the totality of the defence evidence was not sufficient to rebut the irresistible inference that in relation to the property in the relevant charges both D1 and D2 either knew or had reasonable grounds to believe that it represented proceeds of an indictable offence or offences. Regrettably, he did not analyze and criticize the evidence of the two defendants and identify where their evidence was unreasonable, so as to cast doubt on their evidence.  

160.In respect of the principle established in Browne v Dunn (1894)  6 R67, the defence drew my attention to the case of Re Masud MD [2021] HKCA 1449, CACV 341/2021, 7 Oct 2021 in which Coleman J emphasized the importance of fair play and stated the following: -

“32. … The essence of the rule is that where it is intended to suggest that a witness is not speaking the truth or is lying on a particular point, or if there is an intention to impeach the credibility of the evidence of the witness, this should be pointed to him, so that he may have the opportunity of replying to, explaining or otherwise dealing with the aspect of the evidence, allegations or accusations to which his attention is drawn. If this is not done, the court would not know the explanations or information that the witness might have been able to provide if he had the opportunity to respond. It is not only a rule of professional practice and a rule of conduct to be observed by the cross-examiner but is essential to fair play and fair dealing with witnesses. Allegations directed against documents produced by a witness are also covered by this rule.

33. There is also no need to put every minute detail of the case to the witness. The question is whether the witness was given notice that some aspects of his evidence would not be accepted or his credibility in that regard would be impeached.”

161.I also refer to the opening paragraph of the headnote in R v Hart (1932)  23 Cr App R 202 which reads:-

“If, on a crucial part of the case, the prosecution intend to ask the jury to disbelieve the evidence of a witness called for the defence, counsel for the prosecution ought to cross-examine that witness or, at any rate, to make it plain, while the witness is in the box, that his evidence is not accepted.”

162.Notwithstanding the lack of cross-examination, I am alive to the fact that even if there was no cross-examination on the evidence of certain facts, the fact-finder was not bound to accept that item of facts as the fact. Therefore, I now turn to consider the evidence of the defence case before me.

163.D1’s case can be briefly stated as follows. He began working at the Yau Ma Tei Fruit Wholesale Market in 2009. There, as a subcontractor, D1 managed fruit unloading operations, received payments primarily in cash, and used his account for related transactions. In 2014, D1 started a second job at BB Unit, a baby products retailer, earning HKD 29,000–40,000 per month until the company ceased operations in 2018.

164.D1 further said his additional income sources included commission (up to 18%)  as “lamp head” at Hoi Sum Bar (2010–2016)  and investment in Kam Fu Foreign Currency Shop, where an HKD 50,000 buy-in made D1 a minority shareholder. He also said that his interest in high-value watches grew into a trading activity; he bought, sold, and traded watches (mainly Rolex, occasionally Audemars Piguet), often upgrading by trading in less valuable pieces plus cash.

165.D1’s watch purchases and valuations were corroborated by a watch dealer, DW4. Key transactions in D1’s bank account included: (a)  Commission payments from Mr Andrew Cheung Lap Wai (DW2)  for cross-border vehicle registration deals; (b)  Remittance transfers for Mr Lo Kwei Tang Reymont, including cash carried to China and use of Kam Fu Money Exchanger’s services; (c)  Transfers to subcontractors for additional labor at the Fruit Market; and (d)  Frequent cash deposits and withdrawals tied to wage payments and personal expenses.

166.DW2 to DW4 gave evidence confirming D1’s explanations for the origins and uses of his funds, as well as his business dealings and employment history.

167.As regards D2, the wife of D1, she said she took charge of managing the household finances and daily expenses, relying on regular cash contributions from D1. She handled arrangements and received significant amounts of cash and gold ornaments received at the wedding banquet, which were kept in safe deposit boxes.

168.Since the age of 16, D2 said she worked in several industries, including property agencies, fashion retail, and hospitality. D2 eventually became a purchasing agent specializing in luxury goods, engaging in activities such as trading watches and renting out designer handbags. Over the years, D2 built strong networks with luxury boutiques and often collaborated with friends and family to secure exclusive deals. Trading in Rolex watches, particularly discontinued models, proved highly profitable for D2, who also invested in short-term property and car parking spaces, and held a marketing manager role since 2019.

169.In terms of financial habits, D2 preferred cash transactions for both business and household needs, maintaining a cash reserve of about HK$200,000 at home to ensure flexibility and handle emergencies. She managed multiple bank accounts to separate salary income, side hustles, and family expenses, keeping detailed records of all major transactions. The subject bank accounts supported everyday living costs, household contributions from D1, investment activities, and side hustles operations.

170.D2 further said the assets owned by the family were kept in safe deposit boxes and home safe, including cash, luxury watches, gold ornaments, and jewelry. The ownership of luxury watches and jewelry was clearly established for each family member through testimonies and supporting evidence. Some of these valuable items were held on consignments for friends, with proper documentation and agreements in place. Among the assets seized were high-value Rolex and Audemars Piguet watches, wedding and birthday gifts, and significant cash reserves.

171.DW4 to DW7 gave evidence confirming D2's role in sourcing luxury goods and engaging in watch trading.

172.Regarding the bank transactions identified by the prosecution as indicative of money laundering, the Defence submitted an extensive collection of documentary exhibits, many of which were contemporaneous, to clarify the nature of these transactions. 

173.I have the advantage of seeing and hearing both D1 and D2 giving evidence in court and they appear to be witnesses of truth. I do not find them to be evasive when answering questions. I am satisfied that they all gave an accurate account of their knowledge.  The transactions and asset ownership as described by both defendants were corroborated by bank records and invoices. I have also considered the evidence of the five defence witnesses called by D1 and D2.  I find their evidence credible, reliable, clear and straightforward. Their evidence aligned with that of the two defendants, and I accept their evidence.

174.I have also considered all the section 65B statements, including the witness statements of Mr Leung Yat Hang, Ms Lee Sze Wai, Ms Lee Pui Yee and Mr Li Yun Cheung. I attach full weight to these statements. I find the section 65B statements in fact enhanced the credibility and reliability of D1 and D2.

175.Based on the evidence of both defendants and their witnesses, as well as the documentary evidence presented, it appears that D1 and D2 have substantiated their receipt of significant legitimate income during the relevant period. As no actions were taken by the prosecution to challenge or undermine their evidence, I cannot rule out that the funds in the four bank accounts (Charges 1–4), and the items in D1 and D2’s home safe, BOC safe deposit box, and D2’s HSB safe deposit box (Charges 5–7)  were indeed obtained through legitimate income or gains.

176.Mr Tracy argued that the court should convict based on the defendants’ “unexplained sums.” I disagree. Given the long-time lapse between the alleged offences and testimonies such as Charge 2 spanning 2008 to 2017— requiring the defendants to provide detailed explanations for every transaction in the subject bank accounts would, in my view, be unrealistic and excessively harsh. At the end of the day, the focus of this case still lies in the credibility and reliability of both defendants.

177.Both defendants have provided explanations about the fund flows in the relevant bank accounts and the properties in the safe boxes, which were supported by documentary evidence and defence witnesses.  If the defence evidence pointing to innocence is true or might be true, the defendant must be acquitted.

178.Based on the evidence before me, I have come to the view that the prosecution has failed to prove its case against any of the defendants.  In the circumstances, D1 is acquitted of Charges 1, 5 and 6. D2 is acquitted of Charges 2 to 7.