On 11th July 2016 the Court of Final Appeal handed down its judgment in two much anticipated decisions concerning money laundering. The ruling resolves issues which have taxed Hong Kong courts for some time and will have a significant impact on the way money laundering cases are prosecuted and defended. Morley Chow Seto outlines here the key findings for criminal practitioners.
Carson Yeung was convicted in the District Court on five charges of money laundering, contrary to section 25(1) of the Organized and Serious Crimes Ordinance (“OSCO”). The 4 main issues on his appeal were:
1. The Proceeds Issue
Whether the prosecution has to prove the predicate offence in a charge of dealing with property known or believed to represent the proceeds of an indictable offence.
On the basis of the language and structure of the Ordinance, an examination of the amendments made to the provisions creating the offence, the existence of a defence involving disclosure of suspicious transactions and a comparison with money laundering offences in other jurisdictions, the Court held that it is not necessary for the prosecution to prove, as an element of OSCO section 25(1), that the property dealt with by the defendant in fact represents the proceeds of an indictable offence. It is only necessary for the prosecution to prove that the accused dealt with certain property in circumstances where he or she knew or had reasonable grounds to believe that such property represented the proceeds of an indictable offence.
What is the mental element on a charge of money laundering?
3. The Pang Hung Fai Issue
What is the correct formulation in considering whether a defendant had reasonable grounds to believe in the context of OSCO section 25(1)?
Finding on Issues 2 and 3
The Court provided clarification as to what constitutes “having reasonable grounds to believe” that property being dealt with represents any person’s proceeds of an indictable offence as prescribed by OSCO section 25(1). It explained its earlier decision in HKSAR v Pang Hung Fai (2014) and endorsed the approach to the “reasonable grounds to believe” mental element adopted by the Appeal Committee in 1999, holding that: “To convict, the jury had to find that 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.”
4. The Duplicity Issue
Whether, and if so how, the rule against duplicity applies in the context of a money laundering charge. In this regard, the second case concerned Mr. Salim Majed who was convicted in the District Court on four charges of money laundering contravening OSCO section 25(1). His conviction was quashed in the Court of Appeal. The Court of Appeal declined to order a re-trial, holding that the charges were incurably duplicitous. The prosecution obtained leave to appeal on the duplicity issue identical to the one in Yeung’s case.
In Hong Kong, under the Indictment Rules 1976, each paragraph (called a “count”) in an indictment can only properly allege a single offence. This is commonly referred to as the rule against duplicity. The question of duplicity arises where the conduct alleged in a charge involves a number of acts each of which is capable of being treated as a separate offence. In both cases, each of the counts charged money laundering on the basis of numerous deposits into a bank account. The Court held that the purpose of concealing the property comprising those deposits, known or reasonably believed to represent the proceeds of crime, provided a connection which made the individual deposits acts of a similar nature so that they could fairly be regarded as forming part of the same transaction or criminal enterprise. A charge unifying those deposits was therefore justified and the rule against duplicity was not infringed. In Yeung’s case, the CFA upheld the Court of Appeal’s finding that no prejudice was caused by grouping the 963 individual deposits into five charges.
In Majid’s case his defence was that each account was established for the purpose of a legitimate business which he was intending to conduct with Mainland China. This was found to be implausible and was comprehensively rejected by the trial judge. There was no reason to think that his defence would have been any different, or more convincing, had he been charged with 46 offences, or with some different combination of offences, or that in any other respect the aggregation of charges caused any unfairness. The defence case at trial was unaffected by the number of individual acts of dealing which the prosecution alleged.
Yeung’s appeal was dismissed, and the HKSAR’s appeal in Salim’s case was allowed.
This article by MCS also appears in Hong Kong Lawyer, the Official Journal of the Law Society of Hong Kong: http://www.hk-lawyer.org/content/cfa-issues-anticipated-decisions-carson-yeung-and-salim-majed-money-laundering-cases