Executive Summary
On 24 July 2026, the District Court of Hong Kong delivered its Reasons for Verdict in HKSAR v Lai Hei Man ([2026] HKDC 1355; DCCC 340/2025), acquitting the Defendant of a single charge of dealing with property known or believed to represent proceeds of an indictable offence (commonly known as “money laundering”).
The case was presided over by District Court Judge Tam. The prosecution alleged that between 24 and 30 May 2022, the Defendant dealt with illicit funds totalling HK$6,200,335 through her Bank of China (Hong Kong) Limited (“BOCHK”) account, jointly with another woman named “Ms. Lau” (Lau Shuk Kwan, Mina).
In a judicial climate where money laundering prosecutions carry high conviction rates and courts frequently draw adverse inferences against “nominee” or “borrowed” bank accounts, this acquittal provides invaluable strategic defence insights. Rigorously applying the Court of Final Appeal’s landmark Harjani test, the court ruled that after accounting for the specific subjective facts and trust context known to the Defendant, a reasonable person would not inevitably believe the funds were tainted, rendering the prosecution unable to prove its case beyond a reasonable doubt.
We set out below an analysis of the statutory framework, and litigation strategies in this acquittal.
Charges and Statutory Framework: OSCO Section 25(1) & the Harjani Test
The Defendant was charged under Sections 25(1) & (3) of the Organized and Serious Crimes Ordinance (Cap. 455, OSCO).
Judicial Benchmark: The Harjani Test
When evaluating whether a defendant had “reasonable grounds to believe” that funds constituted proceeds of crime, the court strictly applied the three-step verification standard established by the Court of Final Appeal in HKSAR v Harjani Haresh Murlidhar (2019) 22 HKCFAR 446:
The Harjani Three-Pronged Test (OSCO Sec 25(1))
1. Subjective Prong: What facts or circumstances (including the defendant’s personal situation) did the defendant actually know that might affect their belief regarding the funds?
2. Objective Prong: Would a “Reasonable Person,” possessing the same knowledge as the defendant, inevitably believe that the property represented proceeds of crime?
3. Verdict: If YES to the Objective Prong, the defendant is guilty; otherwise, the defendant is NOT GUILTY.
Judge Tam emphasized in his judgment that Harjani explicitly dictates: what matters are the facts and circumstances that caused the defendant to hold a certain belief, rather than the subjective belief itself (Verdict Reasons, para. 8). The court must weigh matters known to the defendant (which incline a reasonable person to believe transactions are clean) against the anomalous characteristics of the transactions themselves (which incline a reasonable person to believe they are tainted). As the Court of Final Appeal confirmed, the test is not whether a reasonable person “could or might believe”, but whether they “would believe”.
Burden of Proof & The “Possibly True” Threshold
Under Section 25(1) of the OSCO, the prosecution retains the legal burden of proof beyond a reasonable doubt at all times. The defendant bears no burden to prove their innocence or that the funds were definitively clean. If the defendant provides a subjective factual explanation for lending the account that the court finds “possibly true,” reasonable doubt is established, mandating an acquittal.
Factual Matrix
The prosecution revolved around a classic scenario where a personal bank account was lent to a close friend and subsequently utilised as a money laundering conduit.
Why the Defence Succeeded
Although the prosecution established highly suspicious, classic money laundering transaction patterns within the bank account, the defence established a reasonable and “possibly true” explanation for why the account was lent.
Defence Dimension | Defendant’s Testimony (DW1) | Court’s Finding |
Unique Personal Relationship | Former female romantic partners in secondary school who maintained a deep, best-friend bond after studying in the US; Defendant treated Mina as family (Verdict Reasons, para. 23). | Accepted: A special relationship existed; Defendant treated Mina as family. Assisting family in distress was logical and credible (Verdict Reasons, para. 52). |
Context of Lending | Mina fled severe domestic violence at midnight bare-handed with her 4-year-old daughter, lacking ID or bank cards. Mina intended to return to hostess work and needed an account to receive customer FPS tips (Verdict Reasons, paras. 25-28). | Accepted: Given their relationship, Mina’s desperate plight, and the dormant BOCHK account, lending the account was not unbelievable (Verdict Reasons, para. 53). |
Lack of Criminal Motive | Defendant faced no financial pressure; her cohabiting boyfriend gave HK$20,000–30,000/month household money, and her mother periodically gave tens of thousands in pocket money (Verdict Reasons, paras. 22, 33). | Accepted: Prosecution did not challenge Defendant’s financial background; Defendant had zero financial motive to commit money laundering (Verdict Reasons, para. 54). |
Post-Event Reaction | Upon her initial arrest in September 2022, Defendant furiously scolded Mina for 10 minutes, then blocked and deleted all historical contact (Verdict Reasons, para. 31). | Accepted: Severing all ties with Mina in extreme anger after being arrested was completely understandable for an innocent party (Verdict Reasons, para. 55). |
Red Flags vs. Green Lights: The Court’s Harjani Analysis
Factor | Judicial Indicators (Red Flags v Green Lights) | Findings in case |
Relationship Foundation |
| Secondary school romantic partners; maintained best-friend bond post-return; treated as family |
Lending Justification |
| Mina fled domestic violence at midnight bare-handed with 4-year-old daughter; no ID or bank cards |
Financial Motive |
| Boyfriend and mother provided ample household support; no financial pressure |
Post-Event Reaction |
| Furious 10-minute call berating Mina; blocked and deleted all contact |
Strangers, online contacts, bar acquaintances
Long-term intimate relationships, family members, years-long friendshipsKey Judicial Excerpt
“I find the Defendant’s evidence to be largely reliable and possibly true… Any reasonable person possessing the knowledge known to the Defendant would not inevitably believe the property represented proceeds of crime.”
— District Court Judge Tam (Verdict Reasons, paras. 52 & 58) – English translation
Conclusion
The prosecution failed to prove guilt beyond a reasonable doubt; the Defendant was acquitted on all counts and discharged (Verdict Reasons, para. 60).
Comparative Legal Landmark Matrix (Lai Hei Man vs. Xiao Rui)
Contrasting this acquittal (Lai Hei Man [[2026] HKDC 1355]) against a recent OSCO conviction (Xiao Rui [[2026] HKDC 1068 & 1327]) illustrates the boundaries of the Harjani test:
Metric & Key Takeaway | HKSAR v Lai Hei Man (Acquittal) | HKSAR v Xiao Rui (Conviction) |
Sum Involved Takeaway: Quantum alone is not decisive; explainability is key. | HK$6.2 Million | HK$64 Million |
Verdict & Sentence Takeaway: The presence of reasonable doubt determines outcome. | ACQUITTED (Not Guilty / Discharged) | CONVICTED (6 Years 9 Months Imprisonment) |
Context of Account Lending Takeaway: Credible lending explanation vs. commercial absurdity. | Fleeing domestic violence; hostess tips | Forged CIES documents; cash in suitcases; fake Bitcoin |
Commercial Logic Takeaway: Courts value “common sense” reasoning. | Logical, humane, and consistent with trust bond | Defied commercial reality and common sense |
Financial Motive Takeaway: Financial benefit is a powerful inference toward guilt. | None (supported by boyfriend and mother) | Astronomical relative to HK$12k salary (PRC) |
Post-Event Reaction Takeaway: Immediate authentic reaction is powerful evidence of innocence. | Furious 10-minute call, blocked, and severed ties | Fabricated narratives; unverified corporate shells |
Strategic Implications & Defense Checklist
If you have already lent your bank account to another person, consider taking the following steps:
- Stop account operations;
- Preserve all communication records – demonstrating pre-existing trust trail, financial motive, post-discovery reactions); and
- Seek legal advice.
Alfred Leung
Partner
D: +852 3468 7202
M: +852 9043 5148
alfredleung@hkytl.com
This article is introductory in nature. Its content is current at the date of publication. It does not constitute legal advice and should not be relied upon as such. You should always obtain legal advice based on your specific circumstances before taking any action relating to matters covered by this article. Some information may have been obtained from external sources, and we cannot guarantee the accuracy or currency of any such information.
Keep up with the latest legal and industry insights, news, and events from YTL LLP
