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Jailed for to helping out a friend in money transactions – appeal dismissed

2022-05-27



Introduction

In our January 2021 issue “Helping out a friend in money transactions could land you in jail”, we have reported the case HKSAR v Man Yiu Pun [2020] HKCA 344 in which the District Court held a person “helping a friend out with his business” to be guilty of two money laundering charges. Mr Man (the “Appellant”) appealed to the Court of Appeal (the “CA”) against his conviction and sentence and permission (leave) to appeal against the Appellant’s criminal conviction on a limited basis was granted. Recently, the CA has laid down its judgment in HKSAR v Man Yiu Pun [2022] HKCU 1436, dismissing the Appellant’s appeal against conviction.

Refresher on the facts

The Appellant was charged with 2 related anti-money laundering charges of conspiracy to deal with property known or believed (having reasonable grounds to believe) to represent proceeds of an indictable offence contrary to section 25 of the Organized and Serious Crimes Ordinance (Cap 455) (“OSCO”) and sections 159A and 159C of the Crimes Ordinance (Cap 200). He was convicted and was sentenced to a total term of 4 years and 5 months’ imprisonment.

In relation to the first charge (the “First Charge”), the Appellant came to know the 4th Defendant (“D4”) whom allegedly told him that he was engaged in trading in Hong Kong and wished to establish a company in Hong Kong for expanding his businesses, but could not register the business since he was a foreigner and could not produce proof of residence. The Appellant thereby helped him register the business (the “Business”) and open a business bank account (the “Bank Account”). A total sum around HK$7.6 million was deposited into the Bank Account and then withdrawn shortly afterwards. As the account holder, the Appellant was the drawer of the cheques and retained custody of the cheque book.

In relation to the second charge (the “Second Charge”), the Appellant was alleged of conspiring with D4 to deal with a sum of around HK$520,000 which had been remitted to the Appellant’s personal savings account (the “Personal Account”) and was subsequently withdrawn. The Applicant alleged that D4 told him that these monies were deposited by D4’s customers and would have to be withdrawn for payment of goods.

 

The arguments

Leave to appeal was granted on the limited basis that in determining whether the Appellant had “reasonable grounds to believe” that he was dealing in the proceeds of crime, the trial judge may have erred in the matters to which he had regard and in the weight which he gave to those matters in determining that the Appellant was guilty of money laundering.

Counsel for the Appellant (the “Appellant Counsel”) argued that there was no relevance nor should any weight be given to the judge’s findings that (1) the Appellant did not report to the Inland Revenue Department any income for himself or on behalf of the Business, (2) the Appellant did not have any real property, and (3) the inherent improbability that buyers of goods would remit payment to a company with which they had no dealings. The Appellant Counsel further argued that there was no benefit to the Appellant in having the money deposited in his account except earning interest off the principal which supports the explanation that the Appellant was only doing so to help a friend, and there was no contradiction for the Appellant to refuse investing in the Business whilst helping to set up the Business.

Counsel for the respondent (the “Respondent Counsel”) referred to the test for “reasonable grounds to believe” formulated by the Court of Final Appeal decision in HKSAR v Harjani Haresh Murlidhar [2019] 22 HKCFAR 446:

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.

 

The Respondent Counsel argued that (1) the Appellant did not have taxable income nor ownership of any real property suggested that the Appellant was a person of modest means and so he should appreciate that the moneys involved were substantial and had nothing to do with him, (2) the Appellant should be aware that the arrangement concealed D4 as the beneficiary of the Bank Account and concealed D4’s connection to the moneys, (3) the Bank Account was used as a repository and conduit for the movement of funds. The Respondent Counsel contended that a reasonable person, being aware of these facts and circumstances, would have believed that the moneys were tainted.

 

The appeal

In terms of the First Charge, the trial judge has taken into account evidence prior and subsequent to the charge period, including registration of the Business, opening up a bank account and failure to file tax return by the Appellant. The CA considered that they were all relevant evidence to prove whether there was a conspiracy agreement to commit the offence of dealing in the proceeds of crime.

In terms of the Second Charge, the trial judge referred to the evidence that the Appellant did not report to the Inland Revenue Department any income for himself or on behalf of the Business. While CA concurred that this piece of evidence has no specific relevance to the Second Charge, in view of the substantial size of the payment and the fact that the Appellant was a person of modest means, the trial judge has properly drawn the inference of guilt against the Appellant.

The CA upheld the trial judge’s decision as the trial judge did not misdirect himself on both the subject element and objective element of the test for “reasonable grounds to believe”. In the trial judge’s reasoning, he has relied on the relevant facts and circumstances that were known to the Appellant which may have affected the Appellant’s belief as to whether the funds were proceeds of crime. After a detailed analysis of the Appellant’s exculpatory explanations provided in Defence’s case, the trial judge rejected all of the explanations as they contradicted the Appellant’s profile of being an experienced businessman.

Conclusion

Under the OSCO, a person commits an offence if he or she deals with any property knowing or having reasonable grounds to believe that such property in whole or in part directly or indirectly represents any person's proceeds of an indictable offence. For an individual, one should exercise caution when being asked to handle monies that belong to another person, especially when the amount is substantial. Companies and individuals that might be involved in such dealings as an intermediary or agent for another need to be particularly cautious and should make enquiries where necessary before taking on the matter or help others.


For enquiries, please feel free to contact us at:

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Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.

Published by ONC Lawyers © 2022

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