- in United States
- within Litigation, Mediation & Arbitration, Government, Public Sector and Intellectual Property topic(s)
Introduction
In the recent case of HKSAR v 徐美儀 [2025] HKDC 1597, the defendant was convicted on two counts of conspiracy to deal with property known or believed to represent the proceeds of an indictable offence. The charge was brought under sections 25(1) and (3) of the Organized and Serious Crimes Ordinance (Cap. 455) ("OSCO") and sections 159A and 159C of the Crimes Ordinance (Cap. 200), commonly known as money laundering. The case highlights the risks of relinquishing control of bank accounts to third parties, even when motivated by personal financial desperation.
Background
Prosecution's case
The defendant opened two bank accounts with 2 local banks, Account 1 and Account 2, on 15 December 2021.
Regarding Account 1, between 3 and 18 January 2022, there were (1) 77 deposits in the sum of HK$5,244,749.31 from various sources, including HK$200,000 from a known scam victim, and (2) 146 withdrawals in the sum of HK$5,244,613 to other accounts.
Regarding Account 2, between 12 February and 25 May 2022, there were (1) 35 deposits in the sum of HK$11,477,893.39, including significant portions from gold sales and foreign exchanges, as well as HK$243,000 from another known scam victim, and (2) 57 withdrawals in the sum of HK$11,260,715.11 to other accounts.
The prosecution argued that the defendant conspired with an individual known as "Apple" to use these accounts for laundering proceeds of indictable offences. In the caution statements and video-recorded interviews, the defendant admitted that she opened the accounts at Apple's direction in exchange for a HK$100,000 loan and handing over the control of the bank accounts (including ATM cards and online banking details) to Apple. The defendant claimed that she was unaware of the use of the accounts for money laundering and she had deleted all communications with Apple after feeling deceived.
Defence's case
The defendant claimed that she became financially distressed after falling victim to an online romance scam in 2021. Desperate for money, she contacted with Apple via social media for loan assistance. Apple accompanied the defendant to various finance companies to borrow money but took most of the funds from the defendant even though the defendant was the borrower and threatened the defendant by claiming a triad background.
Apple then promised a HK$100,000 loan to the defendant on the condition that the defendant would open accounts at 4 major banks and relinquish control of such bank accounts. The Defendant complied with Apple's instructions, believing the accounts were solely for receiving the loan. She denied knowing or suspecting that the accounts would be used for illegal purposes.
Relevant laws
Under section 25(1) of OSCO, a person commits an offence if, knowing or having reasonable grounds to believe that any property in whole or in part directly or indirectly represents any person's proceeds of an indictable offence, he deals with that property. In HKSAR v Yeung Ka Sing Carson (2016) 19 HKCFAR 279 and HKSAR v Harjani Haresh Murlidhar (2019) 22 HKCFAR 446, the Court of Final Appeal formulated the test for the offence as follows:
1. What facts or circumstances, including those personal to the defendant, were known to the defendant that may have affected his belief as to whether the property was the proceeds of crime ("tainted")?
2. Would any reasonable person who shared the defendant's knowledge be bound to believe that the property was tainted?
3. If the answer to question (2) is "yes" the defendant is guilty. If it is "no" the defendant is not guilty.
Additionally, the Court of Appeal in HKSAR v Wong Chor Wo and Another (unrep., CACC 314/2006, 16 June 2008) held that "[i]n the normal course of events, if a man allows another person to use his bank accounts to deposit and withdraw funds, in the absence of evidence to the contrary, the inevitable inference will arise that the holder of the bank account has reasonable grounds to believe that the funds passing through the account represent the proceeds of an indictable offence."
Regarding conspiracy under sections 159A and 159C of the Crimes Ordinance, the Court of Appeal in HKSAR v Lung Ming Chu (unrep.,CACC 165/2008, 11 March 2009) held that "if two people agree to deal with property, and if each of them knows or has reasonable grounds to believe that it represents, or will represent, the proceeds of an indictable offence, that is sufficient to make each of them guilty of conspiracy to contravene s.25(1)."
Decision of the District Court
The Court found the defendant's explanations illogical, contradictory and implausible. She alleged she knew little about Apple and was previously threatened by Apple, yet she still trusted Apple. Under cross-examination, the defendant could not explain why new bank accounts were necessary when she already had one for salary, or why 4 accounts were required.
Applying the test above, the Court ruled that any reasonable person in her position would have believed the accounts would be used to deal with proceeds of crime. The prosecution proved all elements beyond reasonable doubt, leading to convictions on both counts.
Takeaways
This case serves as a stark warning against lending bank accounts or surrendering their control to third parties, even for seemingly legitimate reasons like obtaining loans. It is also important to bear in mind that for a commercial sale of a company or a company's shareholding that includes a bank account of the company, the control of the bank account should not be parted before the completion of the sale. Financial desperation does not excuse ignoring suspicious circumstances. Individuals should exercise extreme caution in financial transactions involving unknown parties and should seek professional advice to avoid unintended involvement in money laundering schemes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.