R v QF

Case [2019] NZHC 3058 22 November 2019

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ORDER PROHIBITING PUBLICATION OF NAME(S), ADDRESS(ES), OCCUPATION(S) OR IDENTIFYING PARTICULARS OF DEFENDANTS

UNTIL 4.00 PM, MONDAY 25 NOVEMBER 2019 OR ON EARLIER ABANDONMENT OF AN APPEAL, PURSUANT TO S 200 CRIMINAL PROCEDURE ACT 2011.

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CRI-2018-004-003151

[2019] NZHC 3058

THE QUEEN

v

QF, FC and JFL

Hearing: 30 September, 1–4, 7-10, 21 October, and 22 November 2019

Appearances:

DG Johnstone and SS McMullan for Crown DPH Jones QC and M Nelson for JFL and QF K Maxwell for FC

Judgment:

22 November 2019

JUDGMENT OF WALKER J

[Verdicts and Reasons]

This judgment was delivered by me on 22 November 2019 at 1.30 pm

Registrar/Deputy Registrar

R v QF, FC and JFL [2019] NZHC 3058 [22 November 2019]

Verdicts

[1]I have today delivered the following verdicts:

(a)In respect of Ms Fuqin Che:

(i)Charge 1: On one charge under s 101 of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) of structuring a transaction to avoid the application of one or more AML/CFT requirements GUILTY.

(ii)Charge 2: On one representative charge under s 91 AML/CFT Act of failing to conduct customer due diligence GUILTY.

(iii)Charge 3: On one representative charge under s 95 AML/CFT Act of failing to keep adequate records relating to a suspicious transaction GUILTY.

(iv)Charge 4: On one representative charge under s 92 AML/CFT Act of failing to report a suspicious transaction GUILTY.

(b)In respect of Jiaxin Finance Limited:

(i)Charge 2: On one representative charge under s 91 AML/CFT Act of failing to conduct customer due diligence GUILTY.

(ii)Charge 3: On one representative charge under s 95 AML/CFT Act of failing to keep adequate records relating to a suspicious transaction GUILTY.

(iii)Charge 4: On one representative charge under s 92 AML/CFT Act of failing to report a suspicious transaction GUILTY.

(c)In respect of Mr Qiang Fu:

(i)Charge 2: On one representative charge under s 91 AML/CFT Act of failing to conduct customer due diligence GUILTY.

(ii)Charge 3: On one representative charge under s 95 AML/CFT Act of failing to keep adequate records relating to a suspicious transaction GUILTY.

(iii)Charge 4: On one representative charge under s 92 AM/CFT Act of failing to report a suspicious transaction GUILTY.

[2]These are my reasons for my verdicts.

Table of Contents

Verdicts [1]

Table of Contents [2]

Background [3]

Overview of the charges [11]

Outline of Crown case [20

Outline of case for Mr Fu and Jiaxin Finance Limited  [22]
Outline of case for Ms Che  [25]
The legislation – an overview  [40]

Factual narrative [52]
Early interaction with DIA [61]

Global Concept fails on-site inspection [23]

Engagement of Camco Partners  [77]
Mr A re-activates contact with Ms Che  [82]
Formal warnings to Global Concept  [93]
Further scrutiny of Jiaxin  [99]
On-site inspection 24 August 2016  [109]

Transactions relating to Mr A – Summary [114]

Bank transfers [114]
Cash or…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading R v QF

Details

AGLC: R v QF [2019] NZHC 3058
Case: [2019] NZHC 3058
Decision Date: 22 November 2019

CaseChat Overview and Summary

This case involved a prosecution of three defendants for breaches of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. The defendants were a money remittance and currency exchange business, Jiaxin Finance Limited, its director and shareholder Qiang Fu, and his mother Fuqin Che. The charges related to the business's failure to comply with various obligations under the Act, including failing to conduct customer due diligence, report suspicious transactions, and keep adequate records. The case hinged on whether the defendants knowingly aided and procured Jiaxin to fail its obligations under the Act, particularly in relation to transactions conducted on behalf of one individual, Mr A, who was suspected of laundering money.

The court found Qiang Fu and Fuqin Che guilty of structuring a transaction to avoid the application of AML/CFT requirements, failing to conduct customer due diligence, and failing to report and keep adequate records about suspicious transactions. The court was satisfied that the defendants had adopted an artificial transaction structure to retain Mr A's business while avoiding scrutiny by the Department of Internal Affairs. The court found that a reasonable person would have suspected the transactions to be suspicious due to their volume, frequency, and lack of stated or recorded commercial objectives.

The court also determined that the offences relating to suspicious transactions employed an objective test, meaning that the reporting entity had to report any transaction that a reasonable person would consider to provide grounds to suspect it was suspicious. The court found that Jiaxin had reasonable grounds to suspect that the transactions were suspicious and that it failed to report and keep adequate records about them.

The court concluded that both Qiang Fu and Fuqin Che were liable as parties to the charges of failing to report a suspicious transaction and failing to retain adequate records. The court found that they considered the transactions to be suspicious and acted in concert to retain a profitable business while minimizing oversight.

The final orders of the court were that Ms Che was found guilty of structuring a transaction to avoid the application of AML/CFT requirements, and guilty of failing to conduct customer due diligence, and failing to report and keep adequate records about suspicious transactions. Mr Fu and Jiaxin were found guilty of failing to conduct customer due diligence, and failing to report and keep adequate records about suspicious transactions.

Orders