Money-laundering: Professionals' Potential Criminal Liability in Handling Clients' Money
On 25 August 2014,
Solicitor Wu Wing-kit (“Wu”) of Fred Kan & Co was convicted after
trial of a charge of money-laundering.[1] The money
involved amounted to HK$68.95 million. This article discusses Wu’s
offence of money-laundering. The Law on
Money-laundering Section 25(1) of the
OSCO Guilty Act Guilty Intention Background It later transpired
that part of the proceeds of sale in relation to the acquisition of UBAH
and/or financial assistance to UBAH (approximately HK$73.7m) was remitted
into Goldmate Securities (USA) Limited (“Goldmate”), a company in
which Chen was the majority shareholder and director. Chen and Wang were
subsequently charged with 1 count of conspiracy to offer advantage to an
agent and 1 count of money-laundering. It was alleged that Chen
accepted, among other things, the HK$73.7 million above from Wang as reward
for procuring the Listco to acquire UBAH. Prosecution’s Case
against Wu Against the above
background, the prosecution’s stance against Wu was that when Wu dealt with
the money of HK$68.95m, he had the knowledge that it, in whole or in part,
directly or indirectly represented proceeds of an indictable offence, or
alternatively, he had reasonable grounds to believe that the money was of
this nature. The prosecution relied on the following highlighted
evidence to prove Wu’s knowledge or belief:- 1.
Wu told her secretary that Chen would put some money into FKC’s Client
Account. He told her to transfer the money to Ye; 2.
Wu signed the payment voucher, classifying the money as “costs and
disbursements refund to client”; 3.
HK$68.95 million was a huge amount rarely made for costs and disbursements
for initial public offer, acquisition of company or any work handled by Wu;
and 4.
Part A of Practice Direction P issued by the Law Society of Hong Kong
required a solicitor to: (i) obtain information on the nature and intended
purpose of the transaction; and (iii) obtain information on the source of
funding. Wu’s Defence Verdict and Sentence 1.
Wu knew that the amount was unusually huge in his professional practice.
He must have recognized immediately that a preliminary payment of
HK$68.95 million at such a short notice would be an unusually large
proportion of the purchase price. It was also unusual for such a
preliminary payment to be paid before the parties had decided on the terms of
the agreement; 2.
Wu knew that Chen’s instruction was unusual since the money was intended to
go from a husband’s company’s bank account to the wife’s account the
following day via FKC’s Client Account. Wu knew that the money actually
came from Chen’s investor, but Wu did not ask the investor’s identity. Chen
said that the investor wanted a solicitor to witness the transfer of the
money to Ye. However, Wu did not tell Chen that the bank record would
itself be solid evidence of the payment without the involvement of a
solicitor; and 3.
Wu knew that Practice Direction P expected a solicitor in his situation of
dealing with client’s or potential client’s money to make enquiries to obtain
information on the nature and intended purpose of the transaction, and the
source of funding. However, at any time before or after he dealt with
the money, he had never attempted to do so. It was a deliberate choice
not to make such enquires. It was not an error of judgment, negligence
or inadvertence. The Court held that
Wu, possessed of the above facts, would objectively consider them sufficient
to lead a person to believe that the money constituted proceeds of an
indictable offence. As a result, Wu was convicted of money-laundering
and sentenced to 6 years imprisonment. Conclusion [1] HKSAR v WU Wing-kit & YE
Fang DCCC
1022/2012 [2] HKSAR v Li Ching [1997]
4 HKC 108 [3] Lam Hei Kit v HKSAR (unrep.,
FAMC No. 27 of 2004) [4] Oei Hengky Wiryo v HKSAR
(No.2) [2007] 1 HKLRD 568 [5] HKSAR
v Shing Siu Ming [1999] 2 HKC
818 |
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IMPORTANT: |
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