CRIMINAL CASE NO. 37 OF 2012
COURT: The defendant was charged with two counts of what is usually known to be the money-laundering offence.
He pleaded guilty to the 1st count and denied the 2nd. The prosecution agreed to leave the 2nd count on the file.
The defendant admitted the Summary of Facts. I am not going to recite all the contents here. What basically happened was that the police came to focus on a Hong Kong company: Fan Tai Electronics (Hong Kong) Limited, and its accounts, when they were investigating into a complaint of fraud.
It was believed that part of the money involved had gone into one of the two Fan Tai accounts. As it turned out, the Fan Tai Hong Kong currency savings account was the one referred to in the 1st count which the defendant had pleaded guilty to, and the second account was the multi-currency account mentioned in the 2nd count.
It was discovered that the defendant was the sole director and shareholder of Fan Tai.
The defendant was arrested for fraud on 13 May 2011 when he entered Hong Kong from the Lo Wu Checkpoint. The relevant bank passbooks were seized from him.
The police have conducted two cautioned interviews on the defendant. During that, the defendant still tried to maintain that Fan Tai was set up to receive payments from his Hong Kong customers relating to the electronic goods business. That included the 500 million-odd deposits. He said he would operate the transfer of funds by internet banking. However, he did not disclose details about his alleged electronic business, and he could not refer to any business records of the company.
The defendant only admitted allowing his friends to use the Fan Tai accounts to transfer money, but then he did not ask them about the source of the funds.
The police have subsequently performed forensic analysis of the Fan Tai accounts. The expert concluded that the situation about the many deposits and withdrawals was unusual for such a company, and the fund flows had effectively created layers of financial transactions which made it difficult to trace the origin of the funds. This layering process was a typical method used in money‑laundering schemes.
The large amount of money sent to the registered remittance agents would bypass the banking system and again made it difficult to trace the origin and destinations of the money involved.
In mitigation, Mr Leung, for the defendant, told the court that the defendant was 41, a mainlander, not well educated, and was married, with children, and he has a clear record in Hong Kong. Mr Leung informed the court that the basis of the plea was reasonable grounds to believe, not actual knowledge. Mr Leung said that the defendant was not charged with the offence of fraud which has started the investigation, and the defendant willingly came to Hong Kong to deal with the allegation of fraud and also because his accounts had been frozen.
Mr Leung stated that the defendant was at first an ordinary businessman, but in 2010 a clansman who was dealing in money remittance had asked him to join the business. He then opened Fan Tai in Hong Kong and set up the company bank accounts so that there would be a higher ceiling for money transfers.
The defendant knew that this would be, in substance, a remittance company, and Fan Tai itself will have no business. The only operation was the deposits and transfers. Counsel said the money frozen were all done under the direction of the clansman. As to the money paid into the accounts of the defendant and his wife, those were not their profits. They just used their own accounts when the company accounts ceiling was reached.
According to Mr Leung, the defendant’s benefit was only 6,000 per month Renminbi. 3,000 was from the commission. 3,000 would be the basic salary.
Mr Leung discussed the cases of Bonner and Lau Man Ying in addressing the issue of the starting point. Mr Leung said he would propose that the approach in Lau Man Ying be adopted by this court.
In our case, Fan Tai was not a registered remittance agent. Obviously its existence was to help do the layering for the process of money laundering.
Bonner is the leading authority in the sentencing of these sort of offences. While the Court of Appeal did not find it appropriate to lay down guidelines, Vice‑President (as he then was) Stock had fully discussed the factors that a sentencing court should take into account in deciding on the level of sentence.
With those relevant factors in mind, I would point out the following regarding the present case:
(1) The defendant must have early knowledge, if not from the very beginning, about the true nature of Fan Tai. In fact, at the cautioned interview, he still tried to maintain that Fan Tai was trading in electronic goods and he only let a few people use the company accounts.
(2) In view of the large amount of transactions involved, the only inference that could reasonably be drawn was that there was a high degree of planning and sophistication in organising the transactions.
(3) There was no clear basis to support a strong international dimension apart from the involvement of the mainland, but the operation itself was of a significant scale.
(4) The company was under the defendant himself solely, and without his help, its operation could not have been smooth and successful.
(5) It was hard to accept the suggestion that the defendant’s profit was only 6,000 Renminbi per month, but be that as it may, Yeung JA’s statement in the case of Chen Zhen Chu should be recalled, that:
“In money laundering cases, the point to consider was the amount of the money handled, not the amount of profit to the defendant or the loss to the victim.”
This court has not forgotten that the maximum for the offence is 14 years and that deterrence is of importance here. I am dealing with an offence that would damage the good reputation of Hong Kong as a leading financial centre.
I do not consider Lau Man Ying being a useful case for comparison purposes. In Lau Man Ying we had a wife thinking that she was helping her husband in the business of the remittance company.
We are not dealing with a registered remittance agent here. It is a company helping to make layers in the laundering process.
Having considered all the circumstances, particularly the amount of money involved, I will adopt a starting point of 7½ years. I will grant the one-third discount for the plea.
Hence, the sentence will be 5 years.
I can see no other mitigating factors, despite the letter prepared by the defendant’s parents.