CFA Removes Doubt On Elements Of Money-Laundering Offences

Author:Mr Vincent Law and Raymond N. H. Chan
Profession:Mayer Brown JSM

On 11 July 2016, the Hong Kong Court of Final Appeal (CFA) in HKSAR v. Yeung Ka Shing Carson, FACC Nos. 5 and 6 of 2015, dismissed Mr. Yeung's appeal against his conviction of five counts of "dealing with property known or believed to represent the proceeds of an indictable offence", or simply "money laundering", contrary to Section 25(1) of the Organized and Serious Crime Ordinance (OSCO).

Among the four questions considered by the CFA, the following two clarify what needs to be proven to establish guilt:

whether it is necessary for the prosecution to prove, as an element of the offence, that the proceeds being dealt with were in fact proceeds of a predicate offence; and in considering the mens rea element to what extent does a trial judge need to make positive findings as to a defendant's belief, thoughts and intentions at the material time even though the judge rejects the defendant's testimony. The "Conduct" Element

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".

The first question concerned whether or not the proceeds in question must be proven to be proceeds of an indication offence to find guilt. The court considered the positions of OSCO before and after the major amendments in 1995 and answered this question in the negative. It was held that by abandoning the original requirement of proving the defendant's involvement in an arrangement dealing with criminal proceeds, the true nature of the proceeds is no longer relevant.

The court explained the strong policy reasons behind this amendment: the possibility for the offence having taken place in multiple jurisdictions which are not susceptible to proof in Hong Kong, and that the proceeds are likely to have passed through various layers and transformation for concealment, making it difficult or impossible to prove the tainted nature of the proceeds.

The "Mental" Element

The second question relates to the requisite mental element (mens rea) of the offence, i.e., whether the defendant had reasonable grounds to believe that the proceeds were proceeds of crime.

At trial, Mr. Yeung testified to give purportedly innocent explanations to negate the existence of reasonable grounds on his part to believe the funds he dealt with were proceeds of crime. His testimony was rejected by the...

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