Money laundering

Offences

• Conversion/transfer of proceeds of crime

Smuggling of migrants

Offences

• Enabling illegal entry
• Procuring, providing or possessing a fraudulent travel or identity document in connection with migrant smuggling

Mode

• sea

Aggravations

• Endangering lives or safety of smuggled migrants

HKSAR v L.H.K. Criminal Appeal No. 84 of 2003

UNODC No.:
CHNh006

Fact Summary

On 12 March 2001, approximately at 6.00 a.m., police officers went to the defendant’s home in Mongkok (Hong Kong, China) with a search warrant.  They were apparently looking for the defendant’s elder brother (L.H.L.2) and his girlfriend (C.S.P.) suspected of money laundering and migrant smuggling.  The police found, in four locked drawers of a wardrobe, 25 Japanese passports and 97 unlawfully obtained Chinese passports as well as a false China mainland immigration stamp.  It was ascertained the Japanese passports had either been lost by their owners or stolen

 

The Japanese passports were wrapped in newspaper and contained in a plastic bag. The other passports were contained in envelopes.  Nothing in the wardrobe where the passports were found related to the defendant, except for an undated envelope addressed to him and originating from Turkey, which contained 24 of the unlawfully obtained Chinese Public Affairs passports.  There were, however, a considerable number of letters and documents, which referred to the defendant’s brother in 1999 and 2000.  There were two sets of keys to the room in which was the wardrobe and to the wardrobe itself. One set was kept in a drawer in the bedroom used by the defendant and his wife, and the other was found on a computer desk in the living room.  That latter set was given by the defendant to a police officer to enable him to unlock the wardrobe. 

 

In the defendant’s room were found a number of bank passbooks.  It was later determined that the defendant had opened one HSB account on 14 October 1998, and one HSBC foreign currency account on 23 October 1995. His wife had opened one HSBC account on 15 July 2000.  Between 21 June and 25 July 2000, numerous deposits were made into these accounts.  Between 21 June and 30 June 2000, there were nine cash deposits (totaling 1 786 285.50 HKD) made into the defendant’s HSB account by or on behalf of his brother.  On or about 5 July 2000, the defendant drew a cheque on his HSB account in the sum of 1 780 000.00 HKD, which was paid into a joint account held by his elder brother and his girlfriend.  This transaction was the subject matter of the first charge of which the applicant was found guilty of (see infra ‘Legal findings’).

 

Between 14 and 25 July 2000, there were11 cash deposits (totaling approximately 80 000.00 USD) made into the defendant’s HSBC foreign currency account.  Between 15 and 24 July 2000, there were eight cash deposits (totaling approximately 40 000.00 USD) made into his wife’s newly opened HSBC account.  That sum of 40 000 USD was transferred to the defendant’s account on 26 July 2000.  A sum of 122 000 USD in that account was put ‘on time deposit’ for one month. On 20 September 2000, the defendant transferred 120 000 USD from his HSBC Forex account to an account in the name of his brother’s girlfriend at the same bank.  This transaction was the subject matter of the second charge of which the applicant was found guilty of (see infra ‘Legal findings’).

 

Upon questioning, the defendant initially maintained that the passports found in the search had been placed in his flat – between June and September 2000 - by his brother, who had told him they were ‘fake’. He later altered the statement in terms that he would ‘know nothing about the passports’.  He also declared that the money in his (the defendant’s) bank account was for margin trading in foreign exchange for a friend. The defendant thus believed his brother to be engaged in migrant smuggling activities and would have told him not to keep the passports in his flat.  The defendant added to have received from his brother, by express mail from overseas, 10‑20 airline tickets, which he saved for him.  The defendant declared that, following a conversation with his brother, he suspected the latter to be involved with the deaths (in June 2000) of 58 irregular migrants, who had died in a container in Dover, in England, one reason being that they all came from a place near his home town in China.  In addition, the defendant stated that his brother had asked him to transfer the money paid into his accounts to that of his brother’s girlfriend. Accordingly, the defendant inferred his brother must have obtained that money by illegal means because his brother had told him that “there was a lot of money to be made by arranging for people ‘to go to other places”. The defendant’s brother was alleged to come seldom to his house, reason why the defendant had not pursued the Dover migrants issue and the location of the fake passports.

The defendant insisted that his brother had a key to the house and the place where the fraudulent documentation had been found, and that he (the defendant) was not involved in – nor aware of - any illegal activities.

 

 

 

In ascertaining the acts, authorities relied much on testimonial and documentary evidence as well as the outcome of searches and seizures.

 

Legal findings:

 

The defendant was convicted by the District Court of: (i) two offences of dealing with property known or believed to represent the proceeds of an indictable offence (migrant smuggling): Counts 1 and 2; (ii) two offences of possessing unlawfully obtained travel documents (Counts 3 and 4). 

The defendant appealed against his conviction on all charges. The High Court of the Hong Kong Special Administrative Region (Court of First Instance) dismissed the appeal.

 

For further details see “Commentary”. 

Commentary and Significant Features

In deciding the case, the High Court of the Hong Kong Special Administrative Region (Court of First Instance) noted as follows:

  • The evidence relied upon by the prosecution in seeking to prove the possession charges was the very same evidence that led to the money laundering charges.  Accordingly, the appeal against conviction in respect of the possession charges should not be considered in isolation from the ‘money laundering’ convictions.
  • It cannot be upheld the Defence’s argument according to which there was in the instant case insufficient evidence upon which to convict the defendant of all charges. That submission becomes unrealistic in view of the available compelling evidence before the Court re (i) cash deposits in June and July 2000; (ii) money transfers; (iii) location of the passports, (iv) defendant’s declarations to the police.
  • Notably, the High Court agreed with the Prosecution argument that the defendant’s use of his brother’s very substantial sums of cash between June and September 2000 - given his knowledge of the brother’s limited resources and what his brother had told him re financial opportunities deriving from ‘helping people to go other places’ - pointed directly to a link between the passports, migrant smuggling and money laundering.
  • Importantly, regarding the money laundering charges, there is no need to prove the specific conduct of the underlying offence (in casu, migrant smuggling) and, therefore, no need for a court to identify such specific conduct. Rather, only the type or category of the crime need be proved.  See HKSAR v. Li Ching (1997) and HKSAR v. Wong Ping Shui (2000).

 

Against this background, the High Court of the Hong Kong Special Administrative Region (Court of First Instance) dismissed the appeal.

 

This case illustrates the importance of ‘following the money’ in complex investigations as are those relating or connected to migrant smuggling. Parallel financial investigations are usually critical in ensuring successful prosecutions.

In addition, given the voluminous profits often linked to organised and systematic migrant smuggling, it is likely that this crime type be usually linked to money-laundering activities, in the perpetrators’ effort of evading the attention of authorities
Sentence Date:
2004-01-09

Cross Cutting

Liability

... for

• completed offence

... based on

• criminal intention

... as involves

• principal offender(s)
• participant, facilitator, accessory

Application of the Convention

Details

• occurred across one (or more) international borders (transnationally)

Involved Countries

China

Japan

United Kingdom of Great Britain and Northern Ireland

Investigation

Involved Agencies

• Criminal Police
• Public Prosecutor

Procedural Information

Legal System:
Mixed System
Type of Proceeding:
Criminal
 
 
Proceeding #1:
  • Stage:
    appeal
  • Is the decision appealable?:
    No
  • Official Case Reference:
    HKSAR v L.H.K. Criminal Appeal No. 84 of 2003 (On Appeal from DCCC 465 of 2002)
  • Decision Date:
    09 January 2004

    Court

    Court Title:
    High Court of the Hong Kong Special Administrative Region – Court of First Instance
     

    Location

  • City/Town:
    Hong Kong
  • • Criminal
    Description:
    On 7 February 2003, the defendant was convicted by the competent District Court. It followed the appeal herein under analysis. The hearing took place on 12 December 2003 and the judgment was issued on 4 January 2004.
     

    Outcome

    Other Outcome:
    Appeal dismissed
     

    Sentences

    Sentence

    Term of Imprisonment:
    4 years
     

    NOTE: The defendant was sentenced to concurrent terms of: (i) two years’ imprisonment in respect of Counts 1 and 2; (ii) three years’ imprisonment in respect of Counts 3 and 4.  Two years of the sentence imposed in respect of Count 3 were ordered to be served consecutively to the concurrent terms imposed in respect of Counts 1 and 2. Hence, the defendant was due to serve a total of four years’ imprisonment.

    Migrants

    Migrant:
    Multiple migrants of unspecified gender and nationality

    Defendants / Respondents in the first instance

    Defendant:
    L.H.K
    Gender:
    Male
    Nationality:
    Chinese
    In essence, the Defence appealed against the conviction on grounds that the defendant had never been “in possession” of fraudulent documents and that at the time he handled (transferred) funds received from his brother, he did not believe, nor did he have reasonable ground for believing, that they were proceeds of crime. There would be no sufficient evidence to conclude otherwise.

    Charges / Claims / Decisions

    Defendant:
    L.H.K
    Statute:
    Organized and Serious Crimes Ordinance Section 25 (1) and (3), Cap. 455 Dealing with property known or believed to represent the proceeds of an indictable offence
    Statute:
    Immigration Ordinance Section 42(2)(c)(i) and (4), Cap. 115 Possessing unlawfully obtained travel documents

    Attachments

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