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An asset management company owner has been sentenced to six years and nine months in prison at the District Court after an investigation by the Independent Commission Against Corruption (ICAC) exposed a massive cross-boundary money laundering scheme involving approximately $64 million in criminal proceeds.
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The money laundering scheme
The defendant, 37-year-old Xiao Rui, was the owner of Augustine Holdings Limited.
Court proceedings revealed that between March 2014 and November 2023, the defendant utilized his position to facilitate thirty-eight suspicious transactions.
A total of more than HK$64 million was funneled into his personal bank accounts through at least twelve different companies and twelve individuals.
Investigations confirmed that none of these entities or individuals had any legitimate business dealings with the asset management firm or its three subsidiaries, nor were they registered clients of the companies.
Xiao was found guilty after a trial of four counts of dealing with property known or believed to represent proceeds of an indictable offense, a charge commonly referred to as money laundering.
Fraudulent residency application
In addition to the financial crimes, the investigation uncovered that the defendant had used deceptive means to secure his stay in the city.
In 2013, he submitted copies of a fabricated certificate of deposit and a false bank passbook to the Immigration Department.
This false asset declaration was used to support his application for Hong Kong residency under the Capital Investment Entrant Scheme that was in place at the time.
As a result of these actions, he was also convicted of one count of using copies of false instruments.
Judicial backlash and confiscation plans
During the sentencing, Deputy Judge Bernard Chung Wai-keung delivered a stern reprimand to the defendant, emphasizing that the gravity of the offenses warranted a strong deterrent sentence.
The judge condemned the defendant's repeated engagement in cross-boundary money laundering over a prolonged period, noting that such substantial illicit activities tarnish Hong Kong's reputation as a clean financial hub.
He also characterized the use of forged documents to gain entry into the city as a serious act of fraud.
While the prison sentence has been finalized, the legal consequences for the defendant are set to continue.
The ICAC has already submitted an application to the court to confiscate the massive sum of crime proceeds tied to the case, with a formal hearing for the confiscation order scheduled to take place on October 7.
