HKSAR v. Zhan Lifu

DCCC 2/2025

[2026] HKDC 1635

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 2 OF 2025

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REASONS FOR SENTENCE

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1.The defendant pleaded guilty to a single charge of “Dealing with property known or believed to represent proceeds of an indictable offence” (“money laundering”), contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap. 455 (“the Ordinance”).

2.The particulars of the offence allege that the defendant, between 7 November 2019 and 13 December 2019, both dates inclusive, in Hong Kong, knowing or having reasonable grounds to believe that property, namely a total sum of USD 2,585,215.47 in the bank account with the Bank of China (Hong Kong) Limited (“BOCHK”), account number 01289120089876 (“the BOC A/C”), in whole or in part directly or indirectly represented any person’s proceeds of an indictable offence, dealt with the said property.

3.In sentencing, I have taken into account the whole circumstances of the case, including its nature and facts, the personal background of the defendant, the mitigation put forward on the defendant’s behalf by his counsel and the relevant case authorities.

Summary of facts

4.The defendant was a Two-Way Permit (“TWP”) holder. He was the sole shareholder cum director of a Hong Kong-registered company known as “Dailywood Ltd” (“DL”), which had been set up on 9 November 2018.

5.DL had a company bank account, namely the BOC A/C. The defendant was the sole authorized signatory of the BOC A/C.

6.The BOC A/C was opened on 10 October 2019.  In the opening mandate, the defendant claimed to be the only shareholder and authorized signatory, and that DL was trading automobile and electronic components.

7.The application for the opening of the BOC A/C was supported by documents including a copy of the defendant’s Chinese identity card copy, TWP copy, and DL’s Certificate of Incorporation and Business Registration. The defendant applied for an online banking service.  BOCHK also provided him with bank statements.

8.Apart from providing BOCHK with an email address and a mobile number in China, the defendant also gave a Hong Kong telephone number to receive notifications from BOCHK.

9.His movement record showed that the defendant had come to Hong Kong on 10 October 2019 and left on the same day.

An “indictable offence and its victim”

10.On 7 November 2019, PW1, the legal manager of a Swiss company (the “VTM”), fell prey to an email scam and subsequently transferred a total sum of EUR105,480.20 into a named bank account in Hong Kong, that of Han Song Trading Co Ltd (“HSTC”) with the Bank of China on 2 December 2019.

11.Subsequently, the VTM realized that it had been “scammed” and reported the case to the police in Hong Kong.  The relevant bank account records were obtained and investigated.

The “laundering”

12.On 3 December 2019, the VTM’s said Euros had been converted into USD116,223.96 and transferred from HSTC’s account into the BOC A/C.  These funds were subsequently consolidated with other incoming funds within the BOC A/C and were later remitted to other bank accounts.

13.Fund flow analysis showed that soon after the monies from other “strangers” arrived in the BOC A/C, they were also amalgamated and siphoned off further within a day or two by bank transfers.  “Hallmark” patterns of money laundering can be observed; the BOC A/C was seemingly used as a collection and temporary depository for funds, being most active between 7 November 2019 and 13 December 2019, during which it recorded total deposits of USD 2,585,215.47 in 39 transactions (including the said sum from HSTC) and withdrawals of USD 2,561,508.01 on 24 occasions.

14.Tax records indicated that DL had filed a tax return for the 2019/2010 financial year but claimed to have made nil profit.  The defendant himself did not file any such returns at all during the material times.

15.These very large sums of money remitted into, and transferred out of, the BOC A/C were simply incommensurate with the defendant’s financial status and/or DL’s accounting or transaction records.

The defendant's arrest and caution

16.The defendant was invited by letters from the Hong Kong Police on 23 July 2024 to come to Hong Kong with all relevant accounting and bank documentation.  He was arrested on 30 August 2024 when he entered Hong Kong via Lo Wu Control Point.

17.During the subsequent video-recorded interview under caution, the defendant admitted having opened the said account for DL’s business usage and being the only person who controlled the BOC A/C.  He had not provided the password or given others access to the account.  He contended that the said sum received from HSTC was just a payment from one of DL’s clients, but he could not provide any accounting records or other proof to support his claim.

Conclusion

18.By his admission, the defendant was always in control of the BOC A/C.  He was the sole signatory. There is no evidence of any other person’s involvement.  He was therefore dealing with the funds in the said account during the material time, knowing or having reasonable grounds to believe that the said property, in whole or in part, directly or indirectly, represented the proceeds of an indictable offence.

Criminal record

19.The defendant has a clear record.

Background and Mitigation

20.In his written mitigation, Mr Keung, counsel for the defendant, submitted that the defendant, aged 46, is a mainland resident living in Shenzhen.  He is married with two children aged 10 and 15, respectively.  He operated a trading company in Shenzhen previously, which ceased business in August 2023.  His reported salary was about RMB 8,000.  He was the sole shareholder and director of a Hong Kong registered company, which was set up in November 2018.

21.Mr Keung stressed the following points:

“a.  [The defendant] was invited by Police to assist the investigation of suspected money laundering activities which took place in December 2019, and was only arrested upon arrival in Hong Kong on 30 August 2024, and has since been detained up until now.

b.  There is only one victim emerging so far, the amount involved in that online fraud totalling EUR 105,480.20, which was roughly an equivalent to US$116,223.96, at the time of the offence. Defence has been notified that the said victim is not coming to testify.

c.  There have no other complaints against the [BOC A/C], and no evidence to suggest other predicate offence either.

d.  There are also no evidence of sophisticated planning or steps involved.

e.  There is no evidence that defendant was aware of the deception, for if he was involved in the deception, he would not have voluntarily come to the Police to assist their investigation.

f.  The offending period is short, covering from 7 November to 13 December 2019.

g.  There was a long delay, between the discovery of the offence and the arrest of the defendant, partly caused by the covid pandemic. That would make any defence difficult.

h.  The defendant was involved in import and export business, between mainland business entities and outside world, utilising the relaxed foreign exchanges facilities in Hong Kong. Some of the sums originally charged has been proved to legitimate, and the charge has since been amended.”[1]

Application for an enhanced sentence

22.The prosecution applied for an enhanced sentence and sought to furnish a statement/report of CIP Li Yiu Nam dated 14 August 2026 (“the Statement”) regarding the prevalence of money laundering offences and the nature and extent of any harm, whether direct or indirect, caused to the community by recent occurrences of money laundering offences, pursuant to section 27(2) of the Ordinance.

23.The defence raised no objection to the application nor to the furnishing of information by the prosecution.  The defence suggested an enhancement of no more than 20%.

Consideration and Sentence

24.The maximum sentence for the offence of money laundering is one of 14 years’ imprisonment.

25.In Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201, Yeung JA (as he then was) observed that:

‘12. “Money laundering” is a serious offence for not only does it encourage criminal activities indirectly, but also attempts to legitimize the proceeds of crime. In order to crack down on serious crimes and to prevent offenders from getting financial gains, it is necessary to deter the commission of “money laundering” offences (see the Court of Appeal in HKSAR v Javid Kamran (unrep., CACC 400/2004, [2005] HKEC 80), HKSAR v Xu Xia Li [2004] 4 HKC 16, etc.).’

26.There is no sentencing tariff for the offence of money laundering because of the range of diverse circumstances that may arise in different cases.

27.In Wan Kwok Keung, Yeung JA further observed that:

“15. In HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, Cheung JA set out the amounts of money involved and the sentences passed in a number of “money laundering” cases. The sentencing starting point is 3 years or so when the “black money” involved is between $1 million and $2 million; 4 years or so where it is between $3 million and $6 million; and could be over 5 years where it is above $10 million.”

28.Deterrence is paramount given the encouragement and nourishment money laundering gives to crime in general, but whilst the amount of money laundered is a significant consideration, it is not “the be-all and end-all” (see HKSAR v Boma [2012] 2 HKLRD 33, at [38]).

29.In Boma, at [40] Stock V.P. (as he then was) also listed other significant considerations that would be taken into account, including (a) the nature of the predicate offence; (b) the state of the offender’s knowledge; (c) where the operation involved an international dimension, this would be a significant aggravating feature; (d) the sophistication of the offence, including the degree of planning; (e) where the offence was committed by or on behalf of an organized criminal syndicate, this would be an aggravating feature; (f) whether there was one transaction or many and the length of time over which the offence was committed; (g) whether the offender continued to launder funds after he had discovered the nature of the funds were proceeds of an offence or a serious offence was involved; and (h) the role of the offender and the acts performed by him.

30.The total amount of “black money” involved in this case was as high as USD2,585,215.47 (equivalent to approximately HKD20,164,680), and the predicate offence was a serious one, email scam.  The maximum sentence of deception and fraud on conviction upon indictment is one of 10 years’ imprisonment and 14 years’ imprisonment, respectively.  However, I accept that only a small part (less than 4.5%) of the “black money” laundered was proved to be from the scam.  Also, there is no evidence to show that the defendant was involved in the scam or had knowledge of it.  The evidence showed that the defendant took the role of a stooge. 

31.Yet, as the sole signatory, the defendant was considered to have personally operated the BOC A/C himself for money laundering purposes on behalf of the criminal.  Nevertheless, the period over which the offence was committed was relatively short, 37 days, and during which the number of transactions (39 deposits and 24 withdrawals) could not be regarded as particularly large. 

32.There was no evidence to suggest that the offence was committed with a high degree of planning. 

33.However, I cannot ignore the fact that there was an international element to the offence.  Hong Kong has to take a very serious view of such matters if its international reputation is not to be sullied.

34.All in all, this is a serious case.  The court needs to impose a sentence that could discourage others from doing the same thing.

Starting point

35.I am of the view that the appropriate starting point should be 5 years and 3 months’ imprisonment (63 months).

Mitigating factors

Delay

36.The defence relied on delay in prosecution as a mitigating factor. 

37.The factors identified as being relevant to delay as a mitigating factor for sentence were identified by Buss JA in his judgment in the Court of Appeal of Western Australia in Scook v The Queen [2008] 185 A Criminal Review 164 at 176, which was cited with approval in HKSAR v Chiu Chi Wing（趙志榮）CACC 243/2012, at [37]:

“First, delay is not, of itself, a mitigating factor.

Secondly, delay will not ordinarily be a mitigating factor if it has been caused by difficulties in detecting, investigating or proving the offences committed by the offender, and the period of the delay is reasonable in the circumstances.

Thirdly, delay will not ordinarily be a mitigating factor if it is caused by the offender’s obstruction or lack of co-operation with the State, prosecuting authorities or investigatory bodies, but the offender’s reliance on his or her legal rights is not obstruction or lack of co-operation for this purpose.

Fourthly, delay will not ordinarily be a mitigating factor if it results from the normal operation of the criminal justice system, including delay as a result of the offender or a co-offender exercising his or her rights; for example, interlocutory appeals and other interlocutory processes.

Fifthly, delay may be conducive to the emergence of mitigating factors; for example, if, during the period of delay, the offender has made progress towards rehabilitation or other circumstances favourable to him or her have emerged.

Sixthly, delay (not being delay of the kind described in the second, third and fourth guiding principles) will ordinarily be a mitigating factor if:

(a)  the delay has resulted in significant stress for the offender or left him or her, to a significant degree, in ‘uncertain suspense’; or

(b)  during the period of delay the offender has adopted a reasonable expectation that he or she would not be charged, or a pending prosecution would not proceed, and the offender has ordered his or her affairs on the faith of that expectation.

Seventhly, delay caused by dilatory or neglectful conduct by the State, prosecuting authorities or investigatory bodies may result in a discount of the sentence that would otherwise be imposed on the offender, if the court thinks it an appropriate means of marking its disapproval of the conduct in question.”

38.Having been referred to Chiu Chi Wing, Mr Keung submitted that the defendant relied on the seventh factor, saying that the police had carried out the investigation “leisurely”.

39.In order to consider whether delay was a factor of mitigation available to the defendant, I called for a chronology of events, and a “Chronology of DCCC 2/2025” signed by DIP Liu Tsz-wa was filed as a result.

40.From the Summary of Facts, the defendant had come to Hong Kong on 10 October 2019, the day when the BOC A/C was opened, and left on the same day.  About a month later, on 7 November 2019, the VTM fell prey to the email scam.  On 2 December 2019, without realizing it was a scam, the VTM remitted a total sum of EUR105,480.20 into HSTC’s account, the first layer of “shields” concealing the identity of the masterminds behind.  On the very next day, 3 December 2019, the Euros were converted into USD116,223.96 and transferred from HSTC’s account into the BOC A/C, which served as the second layer of “shields”. 

41.From the “Chronology of DCCC 2/2025”, the police started the investigation as soon as they had received an online report from PW1 on 19 December 2019.  On 5 February 2020, the BOC A/C, being the second layer bank account, was identified, and on 13 November 2020, the police obtained a search warrant for bank records of the BOC A/C.  On 3 February 2021, the police had visited DL’s registered address, but no office was located at the scene.  On 27 February 2021, the defendant was placed on the wanted and watch list for interception.  Not until 30 August 2024, when the defendant entered Hong Kong, was he intercepted. 

42.From the above chronology of events, it appears that after opening the BOC A/C on 10 October 2019, the defendant had gone to the mainland.  Efforts had been made by the police to locate DL and the defendant but in vain, as DL’s registered address did not seem to be a valid one.  The defendant had since been put on the wanted and watch list but was not intercepted, as he apparently never came back to Hong Kong until he learnt from the police that they were making enquiries and he was invited to come back.

43.Having regard to the factors in Chiu Chi Wing, I conclude that none were present.   Delay is not mitigating factor available to the defendant.

Surrender to authorities

44.Having said that, I note that the defendant voluntarily came back to Hong Kong upon invitation by the police, knowing that the police were making enquiries into the BOC A/C.  A voluntary surrender to the authorities by a person who is wanted is in the interests of justice.  In this regard, credit should be given to him.  For this reason, I reduce the starting point by 3 months to 5 years (60 months).

Sentence before enhancement

45.The defendant indicated his plea at the pre-trial review hearing, after a trial date had been fixed.  He is entitled to a 25% discount for this reason.  I do not consider there to be any other factors that justify a further discount.  So the sentence before any enhancement would be 45 months imprisonment.

Enhancement

46.From the number of the stooges arrested and that of the arrested persons for deception and money laundering cases shown in Table A on page 5 of the Statement, it is shown there was a rising trend in the use of stooge accounts in those types of offences from 2020 to 2024.  Although there was a decline in the number of stooges arrested in 2025, it did not show a downward trend.  In the first half of 2026, 3,156 stooges were arrested, over half the total for 2025.  Besides, the percentage of the total number of arrested persons for deception and money laundering cases using stooge accounts had gone up from 71% in 2025 to 73.48% in the first half of 2026. 

47.Regarding the sum laundered by using stooge accounts, although, as shown in Table B on page 7 of the Statement, the figures declined from $4,466.39 million in 2024 to $3,933.14 million in 2025, for the first half of 2026, the figure remained as high as $1,367.19 million.  Also, the said $1,367.19 million represented 56.01% of the total sum of reported losses in detected deception and money laundering cases for that period, which had gone up from 51.59% in 2025.  

48.From the information provided by CIP Li, I am satisfied that the use of stooge accounts in the commission of money laundering offences remains prevalent, and by recent occurrences of the money laundering offences, considerable harm, whether direct or indirect, is caused to the community. 

49.For the reasons of the prevalence of the use of stooge accounts in the commission of money laundering offences and the nature and extent of harm, whether direct or indirect, caused to the community by recent occurrences of the money laundering offences, I will exercise my power under section 27(2) of the Ordinance to enhance the sentence.  I regard 25% enhancement as being just and appropriate in the circumstances of the case. 

50.After enhancement, the final sentence is 56 months and 7 days’ imprisonment.

Final Sentence

51.For the above reasons, the defendant is sentenced to 56 months and 7 days’ imprisonment.