HKSAR v Yeung Ka Sing Carson [2016] ("Carson Yeung")

Introduction

In HKSAR v Yeung Ka Sing Carson [2016] ("Carson Yeung") the Court of Final Appeal ("CFA") confirmed that on a charge of money laundering, the prosecution only needs to show that the accused had reasonable grounds to believe that the proceeds were proceeds of crime; not that the proceeds were in fact actual proceeds of crime.

Facts

In 2011, the former Birmingham City Football Club chairman, Mr Yeung Ka Sing, Carson ("Yeung"), was convicted in the District Court on five charges of dealing with property believed to be proceeds of an indictable offence, contrary to s.25(1) of the Organised and Serious Crimes Ordinance ("OSCO").

Each of the five charges alleged that Yeung dealt with sums of money in five bank accounts between 2001 and 2007, which according to a forensic accountant, displayed the "hallmarks of money laundering" of over HK$700 million.

Yeung was convicted on the five charges and sentenced to six years' imprisonment. The Hong Kong Court of Appeal ("CA") dismissed Yeung's appeal against conviction, but granted leave to appeal to the CFA in respect of, inter alia, the nature of the proceeds and the mens rea element of a charge contrary to section 25(1). On 11 July 2016, the CFA dismissed Yeung's appeal.

Law

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 the property".

In Carson Yeung the CFA abandoned the original requirement of a section 25(1) offence, which was proof that the property dealt with was in fact proceeds of crime. It is now only necessary for the prosecution to prove that the accused had reasonable grounds to believe that the proceeds in question were proceeds of crime.

The test for "reasonable grounds" was established in Suen Yuet Fong v HKSAR [1999], confirmed in HKSAR v Pang Hung Fai [2014] and followed in Carson Yeung: "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."

Decision

In respect of the five charges, the CFA concluded that Yeung had reasonable grounds to believe that the funds in the various accounts were the proceeds of an indictable offence. The principal findings of the CA and confirmed by the CFA, were, inter alia, that:

  1. there were significant cash deposits into and withdrawals from the accounts and that Yeung knew that payments in cash could conceal the source of the funds;
  2. the funds deposited into the accounts "far exceeded the apparently modest means of Yeung and his father" as disclosed in their tax returns;
  3. the opening and closing balances of the five accounts were similar, indicating that the accounts had been used as a repository fund; and
  4. Yeung lied during testimony, claiming that the sources of cash were from legitimate casino winnings and return of capital and interest on legitimate investments.

Yeung's appeal was dismissed.

Conclusion

The exact nature of the proceeds concerned in each case is no longer relevant for a finding of guilt under section 25(1) OSCO. The harshness of this approach is driven by the growing sophistication of money launderers who make it difficult (if not impossible) to prove the "dirtiness" of the funds involved.

Under Hong Kong law, disclosure to the authorities regarding suspicious transactions immunises a person from liability. Clients who regularly handle third party funds and transactions therefore need to be extremely vigilant and should immediately report any suspicions of money laundering to the appropriate authorities, for even "clean" money may now leave you "dirty-handed".