Experience sharing session – Lawyer sector

Michael Lintern-Smith Chairman, Anti-Money Laundering CommitteePast-President, the Law Society of Hong Kong30 September 2015

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• past two years

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Jan – Mar 2014

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*further detail below

May 2014

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May & June 2014

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Jul 2014

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HKSAR v Wu Wing Kit and another

[DC Conviction; appeal to CA]

25 August 2014

HH Judge E. Yip

Appeal granted on 5

June 2015

D1: HK$68,950,000

D2: HK$122,350,569.09

D1: solicitor to D2’s husband (long-term client) who transferred money on client’s instructions into firm account and out again on the same day.

D2: deposited and withdrew money from accounts across HK-PRC border

Both convicted

D1: 6 years

D2: 6 years 6 months

*further detail below

Aug & Sept 2014

Jan – Mar 2015

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Case name Judgment date / judge

Amount involved Role of the accused Sentence

HKSAR v Chen Jianchao

[CA]

9 Jan 2015

Michael Lunn VP & Derek Pang

HKD230,000 2 charges of conspiracy to deal with property known or believed to be proceeds of an indictable offence

Instructed octogenarian by call to pay outstanding debt allegedly owed by son in order to release son.

Enhanced sentence by 10 months in DCt

pursuant to S25 OSCO

Sentencing in CA also enhanced by

one-third (but later discounted

for PGs)

HKSAR v Kuang Yaowei

[DC]

23 Mar 2015

HH Judge Casewell

HKD200,000 Collected money as part of a telephone deception scheme

Convicted 17 months

HKSAR v Chen Chaoqi

[DC]

26 Mar 2015

HH Judge Dufton

HKD90,000 Collected money from elderly lady as part of telephone deception scheme

Convicted 3 years 2 months

Apr – Jun 2015Case name Judgment

date / judge Amount involved Role of the accused Sentence

HKSAR v Liang Jiawei

[DC]

20 May 2015

HH Judge G. Lam

HKD30,000 Defendant came from China to HK to collect money part of deception scheme

Convicted 24 months

HKSAR v Tung Wai Hong

[DC]

1 June 2015

Deputy Judge E Lin

HKD2.77m between January 2008 and November 2010

Account holder of various interbank transfers of amounts disproportionate to the defendant’s state of finance

Convicted Each of the 4 counts 24 months

to be run concurrently

HKSAR v Li Qiming

[DC]

8 June 2015

Judge G Lam

HKD15,000 Defendant came from China to HK to collect money part of a scheme to deceive an elderly woman

Convicted 24 months

Jun 2015Case name Judgment

date / judge Amount involved

Role of the accused Sentence

HKSAR v 阮志偉

[DC] Chinese judgment

11 June 2015

姚勳智 DJJ

Around HKD4.7m between April 2012 and January 2013

Having control over accounts although no evidence of involvement in defrauding the foreign consumers (but noted that there was much planning in the entire scheme)

Convicted 3 years 3 months

HKSAR v Yu Lik Wai William & Another

[DC]

30 Jun 2015

HH Judge C P Pang

HK$250,000 Conspiracy between 2 D’s, 1 being an employee of a company who sought the help of the other D to find people to operate a hotel’s restaurant without consent of his principal for a kickback of $0.98m from ICAC undercover agents (HK$250,000 in envelop as part payment of $0.98m)

Convicted

[sentence to be released]

July – Sept 2015Case name Judgment date /

judge Amount involved Role of the accused Sentence

HKSAR v Yang Pu

[DC]

6 Jul 2015

Deputy District Judge E Lin

US$272,180 -between 26th March 2014 and 18th August 2015; 2 fraudulent schemes involving 3 victims (Russian companies)

Causing company to be set up, opening of bank account in the authority of director, caused 2 sums to be transferred into bank account on instructions of HK business partner, and withdrew the remainder

Convicted 30 months’

imprisonment

HKSAR v Li Yonghong

[DC]

13 Jul 2015

HH Judge Dufton

HK$120,000 Collected money as part of a telephone deception scheme

Convicted 2 years 8 months’

imprisonment

HKSAR v Lei Haifeng

[DC]

HH Judge Dufton

17 Sept 2015

4 charges involving a total of $48,700 and RMB19,000

Collected money as part of a telephone deception scheme

Convicted 4 years’

imprisonment

HK$ 68.95 millionCONVICTED – 25 August 2014

SENTENCED – 6 years imprisonment

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Source of photo: google

Source: SCMP, 25 August 2014

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Source: SCMP, 19 September 2014

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The sentencing guidelinesDerived from HKSAR v. BOMA [2012], per Stock VP (as he then was):

1.The nature and penalty of the predicate offence;

2.The nature of knowledge or belief of the predicate offence on the part of the money launderer;

3.The international element;

4.The sophistication of the money-laundering offence, including the degree of planning or whether deceit is practiced to achieve the money laundering;

Source: Reasons for Sentence, 19 September 2014

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The sentencing guidelines5. The instance of a criminal syndicate;

6. The number of transactions and the length of time in the money-laundering process;

7. Subsequent knowledge of the predicate offence evolved from a case of reasonable belief; and

8. The role and acts of the money-launderer, including his position and reward.

“It is a category of offence in which the sentencing judge is called upon to engage his “feel” for the case bringing to bear his sentencing experience bearing in mind at all times the mischief at which the legislation is directed.”

Source: Reasons for Sentence, 19 September 2014

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Now…• Defendants in Wu’s case were found to have

reasonable belief that the monies they dealt with constituted proceeds of an indictable offence.

• Wu appealed to the Court of Appeal

• Appeal not yet heard.

Source of photo: google

HK$14,049,380 from 2 accountsConviction of 2.5 years’ imprisonment quashed

Appeal allowed; No new trial ordered

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Source of photo: google

Prosecution directed case to “reasonable grounds to believe”

• Trial Judge applied Shing Siu Ming

• CFA: Should apply instead:

▫ Yan Sui Ling (2012) – i.e. “but the real question he had to resolve in this case was whether it was true or might be true that the appellant was prepared to and did take these risks in engaging such services.”

▫ Seng Yuet Fong [1999] – i.e. “to convict, the jury had to find the accused had grounds for believing; and there was the additional requirement that the grounds must be reasonable: that is, that anyone looking at those grounds objectively would so believe.”

The Defendant’s evaluation and perception • There are two questions to be considered:

1. Objective: would a commonsense right-thinking member of the community have reasonable grounds to believe; and

2. Subjective belief of the accused on whether the money was proceeds of an indictable offence.

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Reason to suspect that proceeds are proceeds of crime…1. Oei Hengky Wiryo v HKSAR [2007] 1 HKLRD

568▫ No need to prove proceeds are actually proceeds of

crime; ▫ Regardless of the subjective belief of the defendant

as to the nature of the proceeds.

2. CF. Pang Hung Fai FACC 8/2013▫ Subjective element in deciding whether money was

proceeds of an indictable offence;▫ Judge entitled to take into account defendant’s

perception and evaluation of facts & matters.

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HK$721,287,606 (5 charges) between 2001 – 2007Conviction of 6 years

Appealing to Court of Final Appeal

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Source of photo: google

Application for leave to appeal –Question 1• S25(1):

▫ Is it necessary for the prosecution to prove, as an element of the offence, that the proceeds being dealt with were in fact proceeds of an indictable offence?

▫ Was Oei Hengky Wiryo (2007) 10 HKCFAR 98 wrongly decided on this issue?

Application for leave to appeal –Question 2• S25(1) OSCO – Mens Rea:

▫ To what extent does a trial judge need to make positive findings as to the defendant’s belief, thoughts, intentions at the material time even though the judge rejects the defendant’s testimony?

▫ In particular, where the trial judge rejects the defendant’s testimony, to what extent can the judge remain oblivious to the defendant’s actual reason(s) for dealing with the specified proceeds in making the finding that the defendant had reasonable grounds to believe that the proceeds he dealt with were proceeds of crime?

Leave granted to appeal on both questions

Easily established offence: Ease of the Prosecution to prove the offence without having to prove the

proceed are proceeds of crime

Vs.

Difficulty of proving proceeds are actual proceeds of crime.

… To be heard in the CFA from 31 May 2016 to 2 June 2016

Other appeals to CFA to be heard after Yeung Ka Sing, Carson

• HKSAR v Salim Majed ▫ The operation of the rule against duplicity▫ To be heard 9 June 2016

• HKSAR v Yang Sigai ▫ The operation of the rule against duplicity;▫ S25(1): “Reasonable grounds to believe” (Seng Yuet Fong (1999) vs.

“knew or ought to have known” (Pang Hung Fai (2014);▫ S25(1): P need to prove proceeds = proceeds of criminal offence?;▫ S25(1): whether judge needs to make positive findings on D’s beliefs

& the extent to which the judge can be oblivious as to D’s actual reason for dealing with the proceeds.

▫ To be heard 29 August 2016

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Source of photo: google

Conflict?

Should the firm cease to act?

▫ Express provision in the retainer on for circumstances of termination of the retainer;

▫ AML checklist – Practice Direction P;

▫ Risk-based approach.

Source of photo: Google

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Source of photo: google

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