Top lawyers clash over fairness of city's anti-money laundering laws

Director of prosecutions and a leading member of Law Society beg to differ over the fairness of city's tough laws against money laundering

Monday, 18 March, 2013, 4:45am

Patsy Moy and Austin Chiu

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Kevin Zervos, Director of Public Prosecutions. Photo: Nora Tam

The Director of Public Prosecutions and one of the city's leading criminal lawyers have offered conflicting views on tough anti-money laundering laws, after two cases involving billions of dollars ended with the accused sentenced to at least 10 years in jail each.

Stephen Hung Wan-shun, chairman of the Law Society's criminal law and procedure panel, told the South China Morning Post that the law made it easy to prosecute and difficult to defend suspects.

The Organised and Serious Crimes Ordinance makes it an offence for a person to deal in property "knowing or having reasonable grounds to believe" that these are the proceeds of an indictable offence. The prosecution does not need to specify or prove that the crimes that generated this income proceeds.

The law has been used on at least two occasions this year to convict suspects accused of laundering a total of almost HK$20 billion. Lam Mei-ling, a 61-year-old woman and tenant of a public housing scheme, was jailed earlier this month for 10 years for laundering HK6.7 billion, and Luo Juncheng, a 22-year-old middle school dropout was jailed in January for 101/2 years for laundering HK$13.1 billion.

In each case the presiding judge conceded that the suspect was probably not the mastermind of the crimes that generated the enormous proceeds.

Hung said since the test was whether a defendant had "reasonable grounds to believe" that he was dealing with crime proceeds, a person who held a bank account for a third party could be easily prosecuted if he or she could not account for the source of the funds. Defendants could be easily prosecuted if they failed to persuade the jury and the judge that they genuinely had no knowledge of the scam, he said.

"It is rather common for elderly parents to open bank accounts for the use of their children, or for wives to do it for husbands. However, the prosecution does not seem to take these elements into account."

Kevin Zervos, the Director of Public Prosecutions, told the Post that he disagreed with Hung, insisting that anti-money laundering laws were "tough laws but for good reasons".

He said the onus was still on the prosecution to prove beyond reasonable doubt that defendants had committed the crime despite the presumption of innocence. "We are dealing with proceeds of serious crime. If countries and states do not have an anti-money laundering regimes and measures in place, they get blacklisted and they cannot function as a viable and legitimate financial centre," Zervos said.

"Taking the profit out of economic crime acts as a powerful disincentive to would-be transgressors. It also prevents the profits of crime from being used to further criminal enterprises."

This article appeared in the South China Morning Post print edition as Lawyers split over fightingillicit cash

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This article is now closed to comments

mskelly Mar 18th 2013
5:01pm

While both cases were probably triggered by bank reports to HKMA, the investigations appear to have been conducted over a number of years, by which time, the amounts ballooned. One would assume the investigators were trying to match a crime, that if conducted in HK would be an indictable offence and perhaps trying to pin down the source and destination of the funds. We are hearing a small part of the story, the simpleton conduits part.
It's unlikely the DPP is going to share with the public what further prosecutions will follow of the mastermind criminals involved. It may be the offences originate on the mainland and prosecution there would be swift and severe not involving HK. If the mainland is trying to protect its laws it would naturally like HK to be equally severe with prosecuting and sentencing of the HK participants, simpletons or otherwise. I just wonder if the investigations had to take so many years making the amounts balloon so much come arrest time. What too of the funds destinations? Back to the mainland as FDI?

mrgoodkat Mar 18th 2013
1:21pm

The problem with the law is that the prosecution does not have to prove that the funds are from an illegal activity. As long as the defendant can't prove the funds are acquired legally he/she is going to lose the trial. That's completely turning the burden of proof concept around.

megafun Mar 18th 2013
12:27pm

I totally agree with Stephen Hung Wan-shun, chairman of the Law Society's criminal law and procedure panel. This trend of HK local judges, led by Gov prosecutors, is changing the balance of crimminal process. The new rulings are not FAIR, and is heading towards more UNJUST in our society.

dienw Mar 18th 2013
12:16pm

Kevin Zervos, the Director of Public Prosecutions, told the Post that he .... [insisted] that anti-money laundering laws were "tough laws but for good reasons".

He said .... "We are dealing with proceeds of serious crime. If countries and states do not have an anti-money laundering regimes and measures in place, they get blacklisted and they cannot function as a viable and legitimate financial centre," Zervos said.

If that is the case (coming from one of the Government's top lawyers, no less), then why does the Government want to hide the ID cards and addresses of company directors? Searches of these records is a key element in anti-money laundering due diligence. Without them, Hong Kong may get "blacklisted" and not be able to "function as a viable and legitimate financial centre".

bmr Mar 18th 2013
11:34am

I fail to see the difference between being asked where you got such large sums of money and where were you on such and such a date. Failure to provide an alibi, allied to circumstantial evidence, could see you done for murder. People with unusually large financial transactions should be forced to offer an explanation.
The recent cases have involved huge sums not just a few millions.

SpeakFreely Mar 18th 2013
9:55am

Hk banks and developers are no doubt best places and partner for money laundering as seen recently a little guy laundering over 5 billion over few years? Or 50 billion I don't remember. No way banks couldn't see that earlier. Same as developers, you probably heard of stories people bringing in 20 to 50m bank notes to snap up properties. If this is not money laundering, what is it?

johnfra Mar 18th 2013
9:42am

It is quite correct to say that it is easy to prosecute and hard to defend this particular offence. However in the two recent cases where the amount involved is in the billions, in the absence of any explanation (not even incredible ones) other than "I have no idea", the only inference, given the status of the defendants, that can be drawn is that the funds has to be connected with unlawful criminal of illicit activities. Why would a genuine owner of such large funds need to have some third party help in moving the funds. So the actual large sums involved is sufficient proof after all it is in reality one of common sense. This being so, this type of cases should be tried before Hong Kong juries so that their collective common sense will lead to the right result.
The difficulty is where the amount is not so large, say a couple of millions. Nowadays money being what it is, this is no longer eyebrow-raising amount. People (mostly parents relatives etc) who do others a favour upon request and don't pay much attention to same are in danger.
How banks fail to notice such activities staggers the imagination. Just think about your own Credit Card usage. If your average spending is in the hundreds and suddenly there is an amount of several thousand charged to your card, Credit Card companies immediately (almost) ring up the Cardholder and ask whether he/she just used the card. Compare this to the bank teller who day after day make transfers of millions in the same account.

honger Mar 18th 2013
8:46am

Mere suspicion, PCC? We are talking about billions of dollars here.
With their backgrounds, the two convicted would have never had even a billionth chance of getting hold of the massive funds in their accounts.
The "reason to believe" clause is always based on strong evidence already in hand, in these cases, the billions that were routed thru Luo and Lam's banks.
Laws are enacted to protect the interests of the public, not for the convenience of whimpering lawyers who act for money launderers.

ianson Mar 18th 2013
7:54am

Mr Zervos' instincts are in the right place but he does not need this nuclear weapon. At least require the prosecution to prove the underlying indictable offence to the balance of probabilities standard. Mere suspicion has no place in our legal system. It's the sort of thing that gives a jurisdiction that respects human rights and the rule of law a bad name.

PCC Mar 18th 2013
5:14am

Is it a crime to transfer money from one bank account to another? Governments should not incarcerate people on the mere suspicion that one may be handling the proceeds of criminal activity; they should be obliged to prove it.