The defendant was charged with five offences of dealing with property believed to represent the proceeds of an indictable offence contrary to s 25 of the Organised and Serious Crimes Ordinance (Cap. 455). The prosecution was required to prove beyond reasonable doubt that the defendant knew, or had reasonable grounds to believe, that the property had been the proceeds of an indictable offence.

The prosecution’s case was that HKD 721,287,607 had been deposited into the defendant’s accounts, not all of which could be explained. The prosecution used a forensic accountant to analyse the defendant’s accounts. The expert discovered a number of hallmarks of money laundering. In particular, 24 transactions in which deposits were made with identical amounts withdrawn on the same day. The prosecution did not examine the true source of the income, but relied on the questionability of the origins of the funds.

The prosecution called eight witnesses including the investigating officer and the forensic expert. It was found that the defendant was obviously a person of considerable worth prior to his offending, although evidence was unable to establish the extent of earnings derived from his salons.

The defence case relied on a number of witnesses including members of various banks he had accounts with who asserted that the defendant was a successful share trader. Other witnesses were not aware of where his money had come from.

The trial judge made a number of findings based on the evidence adduced. The judge found that the prosecution witnesses were honest and reliable and he accepted the analysis of the defendant’s accounts given by the forensic expert witness as well as statements from various other witnesses.

The judge found that the defence witnesses had told the truth concerning what they knew about the defendant, but that the defendant was not a witness of truth and that he was someone who was prepared to—and indeed did try to—lie whenever he needed to do so. In terms of his sources of income, the judge found that it was not definitive as to whether the money he claimed to have made was real. In relation to this in terms of the salon profits, his story had changed during cross-examination. The judge remarked that the defendant was a smart person who was obviously good with figures and familiar with how companies are conducted. As such, he had no reason to confuse net profits and turnover. The trial judge found that the defendant lied about his salon profits which were set out in the statement of facts.

The defence team applied for a stay of proceedings on the grounds that the defendant could not have a fair trial. This was due to missing documents caused by lapse of time and failure of the police to investigate the matter fully. In order for this application to succeed the defence had to prove on the balance of probabilities that the grounds of the complaint had been made out and the only remedy was for a stay of proceedings to occur. The defence case was that the defendant had made most of his money through trading in securities. The lack of documents meant, however, that he was unable to prove this. It was argued that this fact had prejudiced his defence resulting in the trial being unfair and amounting to an abuse of process. There was also a complaint that the police should have properly investigated the security companies involved. Had they done so, the documentary records in relation to the defendant’s cash dealings with the security companies would have been disclosed.

The application for a stay of proceedings was rejected by the court due to failure to demonstrate that these problems had inherently disrupted the fairness of the trial process.

The defendant was found guilty of the five charges of dealing with property believed to represent proceeds of an indictable offence. He was sentenced to 6 years’ imprisonment.

The defendant sought leave to appeal against his convictions and sentence in the High Court of Hong Kong (Court of Appeal). The defendant was granted leave to appeal against conviction but his appeal against conviction was dismissed by the Court of Appeal on 13 May 2015.

Following the refusal of his appeal against conviction, the defendant notified the Court of Final Appeal that he did not intend to pursue the appeal against his sentence. On 15 May 2015, the Court of Appeal refused the defendant leave to appeal against sentence.

In the Court of Final Appeal, the defendant appealed against the decision of the Court of Appeal to refuse his appeal against conviction. The case was heard together with a prosecution appeal against the Court of Appeal’s refusal to order a retrial against an unrelated defendant, Mr Majed Salim, upon quashing his conviction.

Questions before the Court

Before the court were for questions of law certified as being of great and general importance. The first question was whether, on a charge of dealing with proceeds of crime contrary to s 25 of the Organized and Serious Crimes Ordinance (Cap 455) (‘OSCO’), it was 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.

The second question was whether, in considering the mens rea of a charge contrary to s 25 of OSCO:

‘to what extent does a trial judge need to make positive findings as to a 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?’

The third question related to the operation of the rule against duplicity—the requirement that a count in an indictment set out only one offence—in relation to the offence of money laundering under s 25 of OSCO. In particular, the question was whether the offence of money laundering could be a considering a ‘continuing offence’ such that the rule against duplicity would not apply.

Finally, the fourth and last question before the court was reconciling different statements of Hong Kong courts regarding the test of having ‘reasonable grounds to believe’, as set out in s 25 of OSCO.

Decision of the Court

The Court first considered questions 1, 2 and 4 because these questions bore upon the elements of the offence established by s 25 of OSCO, before turning to the issue of duplicity, question 3.

In relation to the first question, the Court held that for a charge under s 25 of OSCO, it was not necessary for the prosecution to prove, as an element of the offence, that the proceeds being dealt with were in fact the proceeds of an indictable offence, affirming its previous decision in Oei Hengky Wiryo v HKSAR (No 2) (2007) 10 HKCFAR 98. It was only necessary to prove that the accused dealt with certain property knowing or having reasonable grounds to believe that such property represented the proceeds of an indictable offence.

The Court decided questions 2 and 4 together as both questions concerned the mens rea requirements of s 25. As for question 2, the Court held that in every case, the ultimate question for the trial judge was whether, according to the evidence before the court, all the elements of the offence had been established beyond reasonable doubt. There was no super-added requirement that even after rejecting the defendant’s testimony, a trial judge was required to make findings as to the belief, thoughts and intentions of the defendant at the material time, whatever the state of the other evidence before the court. The trial judge had therefore not erred in failing to make such a positive finding. The trial judge, having almost entirely disbelieved the defendant’s testimony, correctly considered whether the offences were made out beyond reasonable doubt. No error of law was involved in the judge reaching the conclusion that the offences had been made out beyond reasonable doubt.

In relation to question 4, the Court held that there was no contradiction between the earlier case law of Hong Kong courts. The relevant mental element for the offence under s 25 was always whether the defendant knew or had reasonable grounds to believe that the property represented proceeds of an indictable offence.

In relation to question 3, the Court held:

‘In cases of money laundering it will often be cumbersome and impractical to frame a separate count for each possible unit of criminal conduct arising from the facts alleged against the defendant. Where a number of acts of money laundering are connected in such a way that they can be regarded as forming part of the same transaction or criminal enterprise then it will be legitimate to charge them in a single count unless there is a risk of injustice to the defendant. Such injustice might lie in uncertainty or inadequate notice as to the case the defendant has to meet, confusion or prejudice resulting from different defences to different aspects of the prosecution case, problems of admissibility of evidence, or uncertainty as to the scope of an ultimate verdict. If these or other considerations that may be raised in a particular case are capable of being met, without unfairness, by appropriate measures of trial management then a court may well conclude that the rule [against duplicity] does not prevent aggregation for the purpose of framing a charge or charges.’

As regards Mr Yeung Ka Sing, the Court of Final Appeal held that the Court of Appeal had erred in failing to properly address the question of duplicity but upheld the Court of Appeal’s conclusion that ultimately the defendant was not prejudiced by any such infringement.

As regards Mr Salim’s case, the Court of Final Appeal held that the Court of Appeal had erred in failing to ask itself what unfairness would result from the aggregation of charges upon a retrial or how such aggregation would relate to the rationale of the rule against duplicity.

The Court of Final Appeal dismissed Mr Yeung Ka Sing’s appeal on the basis that no grounds for relief had been established. The Court allowed the prosecution’s appeal in the case of Mr Salim, and issued a declaration that the Court of Appeal had erred in holding that the offences charged against the defendant were incurably duplicitous. The prosecution did not seek a retrial of Mr Salim, however, as Mr Salim had already left Hong Kong after his appeal was allowed.