HKSAR v. Chen Hanwei

DCCC 756/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 756 OF 2012

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REASONS FOR SENTENCE

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The defendant pleaded guilty to a "Money Laundering" offence. The total sums involved are roughly HK$62 million, US$17 million and €196,000 (altogether approximately HK$195 million[1]).

Summary of Facts

The Defendant's Bank Account

2.On 19 November 2010, the defendant, who is a mainland resident, opened an integrated business account ("the Defendant's Account") with The Hongkong and Shanghai Banking Corporation Limited ("HSBC").  The said account was held in the name of Weiguangbo Limited and the defendant was the sole signatory of that account. The Defendant's Account consisted of 2 elements: HK dollar savings and foreign currency savings.  It was closed on 7 April 2011.

3.Weiguangbo Limited was incorporated on 4 November 2010 in Hong Kong.  The defendant was a director of this company.

The Underlying "Theft" Offence

4.Mr. Abdulaziz (PW1) is the owner of a jewellery trading company in Tsim Sha Tsui.  In 2003, PW1 began to employ Mr. HO Shing-hin, Derek as his assistant.  PW1 trusted HO and opened a joint account with HSBC together with HO ("the Joint Account"). Either one of them had full authority to operate this bank account.

5.On 27 January 2011, PW1 deposited 2 cheques in a total sum of HK$5,384,933.77 into the Joint Account in the presence of HO.  On the following day, without PW1's consent, HO transferred HK$4 million from the Joint Account to the Defendant's Account.  He also transferred another sum of HK$1,385,000 from the Joint Account to an HSBC account held in the name of CAI Luye.  In February 2011, PW1 discovered that HO had stolen the money in the Joint Account and lost contact with HO.  The Police was alerted.

6.Upon receipt of the HK$4 million in the Defendant's Account on 28 January 2011, the said sum was transferred on the same day to another bank account held in the name of Qituo Trading Company Limited ("Qituo").

Fund Flow Analysis of the Defendant's Account

7.From 19 November 2010 to 7 April 2011, the Defendant's Account received a total of 100 deposits with an aggregate sum of HK$62,194,723.50 (which includes the HK$4 million stolen by HO).  The same total sum was taken out of the account by 103 withdrawals. In respect of foreign currencies, the Defendant's Account received a total of 305 deposits with an aggregate sum of US$16,887,738.49.  The same total sum was taken out of the account by 262 withdrawals.  The Defendant's Account also received a total of 3 deposits with an aggregate sum of €196,095.  The same total sum was taken out of the account by 3 withdrawals.

8.The monies deposited into the Defendant's Account were withdrawn within the same day or 1 or 2 days of the deposits.  The withdrawals were conducted by way of internet transfers, almost 90% of which was transfers of monies into the bank account of Qituo.

9.The defendant was arrested by the Police on 7 June 2012 at the border when he entered Hong Kong.  Under caution, he admitted that he received primary level education in the mainland. He was a factory worker earning RMB3,200 per month.  Whilst working in an electronic factory, he met a person called "Uncle Chan".

10.After the defendant had resigned from the electronic factory, Uncle Chan contacted him asking him to set up a company and to open a bank account for business purpose.  The defendant thus went to Hong Kong with Uncle Chan to open the Defendant's Account.    Thereafter, he passed all the relevant documents, including the ATM card and passbook, to Uncle Chan.  The defendant does not know the full name of Uncle Chan and is unable to contact him.  He and Uncle Chan had visited Hong Kong one more time after the account was opened.  He had not seen Uncle Chan since.

11.Some time in 2011, through a friend, Uncle Chan gave the defendant some documents to sign for the purpose of cancelling the Defendant's Account.   However, the defendant did not know if the account was in fact cancelled.

12.Immigration record shows that the defendant came to Hong Kong on 19 November and 1 December 2010.  He left Hong Kong on the same day on both occasions.

Mitigation & Sentence

13.The defendant is now 31, married and has a clear record.  He resides with his wife and 2 sons (aged 4 and 2) in Shenzhen.

14.Defence counsel Ms. CHENG submitted that the defendant took no part in withdrawing money from his bank account.  He knew nothing about the underlying theft offence, and certainly was not the mastermind of this case.  Furthermore, the defendant did not receive any reward or gain any benefit from helping Uncle Chan.  The defendant agreed to help Uncle Chan because he was the defendant's superior.  The defendant did not ask any questions but simply respected Uncle Chan.

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

"Money laundering" is a serious offence for not only does it encourage criminal activities indirectly, but also attempt to legitimize the proceeds of crime. In order to crack down on serious crimes, to prevent offenders from getting financial gains, it is necessary to deter the commission of the "money laundering" offences.

Generally, the sentence for "money laundering" offences should mainly reflect the amount of "black money" laundered and not the benefit obtained by the defendant or others. The reason being that it is very difficult to prove the benefit concerned, and in most "money laundering" cases, there may not be evidence to show from what indictable offence the "black money" are in fact derived. Of course, if there is information to prove that the "black money" is originated from serious crimes, including drug

trafficking, kidnap and blackmail, illegal human trafficking, other organized crimes, etc. or the defendant's benefit is huge, then the sentence should be adjusted upward.[2]

16.I have reminded myself of the sentencing principles laid down in HKSAR v HSU Yu Yi [2010] 5 HKLRD 545 and HKSAR v Boma Amaso [2012] 2 HKLRD 33.  As held by the Court of Appeal in both HSU Yu Yi and WAN Kwok Keung, when the "black money" involved is over HK$10 million, the starting point can be above 5 years' imprisonment.

17.For the purpose of sentencing, I agree with Ms. CHENG that the evidence only shows that the defendant was involved in the opening of the HSBC account and handing over of the ATM card and passbook to Uncle Chan.  There is no evidence of any international element or the defendant having received any benefit or reward.  I also note that other than the HK$4 million stolen by HO, there is no evidence of any underlying criminal activities connected with the rest of the money which went through the Defendant's Account.

18.In determining the proper starting point, I have borne in mind the amount of money involved, the duration of the offence, the defendant's role in relation to the movements of funds as well as his personal circumstances.  What I cannot overlook is a total of HK$195 million did go through the Defendant's Account.

19.Based on the low level of his participation, lack of international element and evidence of any benefits gained by the defendant as well as his clear record, I adopt a starting point of 5 years' imprisonment.  A one-third discount is given for his guilty plea, reducing the sentence to 40 months.  Apart from this, I see no other mitigating factors which warrant any further discount.  Hence, the sentence I impose is 3 years and 4 months' imprisonment.