Jurisdiction - Hong Kong
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Hong Kong – Update On Money Laundering.

18 November, 2014

 

Legal News & Analysis – Asia Pacific – Hong Kong – White Collar Crime

 

On 10th November 2014 the Court of Final Appeal unanimously allowed the appeal of Pang Hung Fai against his earlier conviction for money laundering in the District Court. In an important judgment delivered by Mr. Justice Spigelman NPJ, the Court of Final Appeal examined the interpretation of the words “having reasonable grounds to believe” where it appears in section 25(1) of the Organized and Serious Crimes Ordinance, Cap 455. Mr. Justice Spigelman stressed the importance of maintaining the focus of inquiry on the defendant, and not on what have become to be known as the “objective” and “subjective” elements of the offence. It must now be shown that the defendant had reasonable grounds to believe that the property with which he dealt represented the proceeds of crime. The personal beliefs, perceptions and prejudices of a defendant are relevant and can be given weight by a judge or jury when assessing whether a particular defendant had reasonable grounds to believe that property represents the proceeds of crime.

 

The questions answered by the Court of Final Appeal were as follows:

 

Question: When seeking to determine whether a person has reasonable grounds to believe that property dealt with represents the proceeds of an indictable offence, what facts and matters are to be taken into account as constituting such reasonable grounds?

  • Answer: In relation to offences under section 25(1) of OSCO, when seeking to determine whether a person has reasonable grounds to believe that the property dealt with represents the proceeds of an indictable offence, the Court held that when assessing the whole of the evidence, the judge or jury are entitled to take into account the defendant’s perception and evaluation of the facts and matters as constituting or contributing to reasonable grounds.  Accordingly, since the lower courts did not take into account the defendant’s case on the trust that existed between the defendant and his friend, it failed to take into account of the defendant’s perception and evaluation of relevant facts.

 

Question: What is the appropriate standard to be applied in evaluating the content of the reasonable man’s belief?

  • Answer: In the determination of whether the defendant’s grounds of belief are reasonable, the test is whether any reasonable person looking at grounds “would believe” that the property dealt with represents the proceeds of an indictable offence rather than a test of “could believe”. The Court of Appeal had erred in following an earlier case and applying the “could believe” test, which is an inappropriately low standard compared to the “would believe” test.

 

Question: Is it a defence to a money laundering charge to show that notwithstanding the prosecution has established that there exist reasonable grounds to believe that property represents the proceeds of crime, a defendant nonetheless honestly and reasonably did not suspect that property to be the proceeds of crime?

  • Answer: The Court held that this “halfway house” defence does not arise.

 

The full judgment of the Court of Final Appeal can be found here: PANG HUNG FAI (彭洪輝)-v- HKSAR (FACC No. 8 of 2013)

 

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For further information, please contact:

 

Christopher Morley, Partner, Morley Chow Seto

christopher.morley@mcs.com.hk

 

Eric Seto, Partner, Morley Chow Seto

eric.seto@mcs.com.hk

 

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