Case Summaries

Chinpo Shipping Company (Private) Limited v Public Prosecutor

SUPREME COURT SINGAPORE

12 May 2017

Media Summary

Chinpo Shipping Company (Private) Limited v Public Prosecutor
Magistrate’s Appeal No 9016 of 2016

Decision of the High Court (delivered by See Kee Oon J)

1     The appellant, Chinpo Shipping Company (Private) Limited (“Chinpo”), appealed against its convictions and sentences in the State Courts on two charges:

  1. one charge under Regulation 12(b) of the United Nations (Sanctions – Democratic People’s Republic of Korea) Regulations 2010 (“Reg 12(b)” and the “DPRK Regulations” respectively) for transferring assets or resources that could reasonably be used to contribute to the nuclear-related programs or activities of the Democratic People’s Republic of Korea (the “DPRK”); and

  2. one charge under s 6(1) of the Money-changing and Remittance Businesses Act (the “MCRBA”) for carrying on a remittance business without a valid remittance license.

2.     Chinpo was fined $80,000 in respect of the DPRK Regulations Charge and $100,000 in respect of the MCRBA Charge.

Facts

3     Chinpo carried on the business of ship agencies and ship chandlers. On 8 July 2013, it remitted US$72,016.76 to C.B. Fenton and Co. S.A., a shipping agent operating at the Panama Canal, from its Bank of China (“BOC”) account (the “Transfer”). This US$72,016.76 was used to pay the transit expenses for the passage of a DPRK-flagged vessel, the MV Chong Chon Gang (the “Ship”), through the Panama Canal en route to the DPRK. The Ship was administered by Ocean Maritime Management Company Limited (“OMM”), a DPRK ship operator, for whom Chinpo and its associated companies provided ship agency services.

4     On 11 July 2013, the Ship was found with arms and related materiel (the “Materiel”) comprising (a) six trailers of SA-2 and SA-3 surface-to-air missile systems; (b) two MiG-21 aircraft and engines for them; and (c) ammunition and miscellaneous arms-related materiel such as rifles and night-vision binoculars. The Materiel was hidden under 10,500 metric tonnes of sugar.

5     Separately, between 2 April 2009 and 3 July 2013, Chinpo had made 605 outward remittances on behalf of OMM and other DPRK entities from its BOC account, charging a fee of at least US$50 per remittance on most occasions. The total value of the 605 remittances was US$40,138,840.87.

Judgment

6     The High Court allowed the appeal by Chinpo against the DPRK Regulations Charge, but dismissed the appeal by Chinpo against the MCRBA Charge.

 DPRK Regulations Charge

7     In respect of the DPRK Regulations Charge, Reg 12(b) prohibits the transfer of financial assets or resources that “may reasonably be used to contribute to the nuclear-related, ballistic missile related, or other weapons of mass destruction related programs or activities of the [DPRK]” (the “NRPA of the DPRK”, for short).

8     Reg 12(b) does not require proof of knowledge on the part of the accused that the relevant transfer could reasonably be used to contribute to the NRPA of the DPRK. The word, “reasonably”, in particular, connotes an objective standard by which the liability of the accused is to be assessed. Such a standard is incompatible with a requirement for a subjective mental element of “knowledge” on the part of the accused. Nevertheless, an accused can avail itself of the defence in s 79 of the Penal Code of a mistake of fact by a person who has acted in good faith having exercised due care and attention to avoid the mistake.

9     In the present case, the s 79 defence was not applicable to Chinpo, which clearly made no checks or queries in relation to the Transfer. As the District Judge found, Chinpo simply executed the remittance instructions that it received, both in relation to the Transfer and past remittances, “without delay” and without raising any queries.

10     The question under Reg 12(b) is whether the Transfer could reasonably be used to contribute to the NRPA of the DPRK, rather than whether the Materiel could do so. What the Transfer was ultimately used to pay for, and the nature of and potential uses of the Materiel on board the Ship, are factors in the assessment of whether the Transfer could reasonably contribute to the NRPA of the DPRK. This had to be assessed as a factual matter and retrospectively, with all relevant information taken into account to determine whether (or not) the Transfer did (or did not) in fact contribute to the nuclear proliferation efforts of the DPRK.

11     Reg 12(b) imposes an objective standard by which the effect of the transfer of assets/resources falls to be assessed. The court must undertake this inquiry objectively – from the perspective of a reasonable person with the knowledge and in the circumstances of the accused – to assess whether such a person would have appreciated that the transfer could have the effect of contributing to the NRPA of the DPRK.

12     In the present case, the Transfer fell outside the mischief of the DPRK Regulations. A reasonable person in the position of Chinpo would not have appreciated that the Transfer could have had the effect of contributing to the NRPA of the DPRK. The Transfer was not for the acquisition of the Materiel but went purely to the payment of port fees and related charges for the passage of the Ship through the Panama Canal. Although the Materiel had been on board the Ship, this was not known to Chinpo when it made the Transfer. Hence, the Transfer was at least somewhat removed from a transfer of funds in direct support of the NRPA of the DPRK, which is the mischief that Reg 12(b) targets.

13     Reg 12(b) should not be construed so expansively as to effectively extend to all transfers somehow connected with the acquisition of any military equipment by the DPRK. To fall within Reg 12(b), a transfer must have a direct contribution to the NRPA of the DPRK. In the present case, the Materiel comprised only conventional weaponry, and a payment for the passage of a vessel (even one that, unknown to Chinpo, was carrying the Materiel) fell outside the scope of the assets that could “contribute” to the NRPA of the DPRK.

14     Accordingly, the DPRK Regulations Charge could not be sustained.

MCRBA Charge

15     In respect of the MCRBA Charge, s 6 of the MCRBA provides that no person shall carry on “remittance business” without a valid remittance license. Section 2(1) of the MCRBA defines “remittance business” as the business of accepting moneys for the purpose of transmitting them to persons resident in another country or a territory outside Singapore. Section 2(2) of the MCRBA further provides that a person shall be deemed to be carrying on remittance business if he offers to transmit money on behalf of any person to another person resident in another country.

16     In light of the anti-money laundering and counter-terrorism financing objects of the MCRBA, the legislative focus is always on the result of a transaction: the delivery of funds on behalf of a payor to an intended payee. The licensing framework for “remittance businesses” under the MCRBA thus applies to an (upstream) entity that accepts moneys from a payor and then instructs a financial institution to transmit the moneys to the intended payee.

17     The 605 remittances involved Chinpo accepting the moneys of various DPRK entities and then engaging the BOC to deliver a total of US$40,138,840.87 to the intended payees via telegraphic transfers. Accordingly, the 605 remittances constituted “remittances” for the purpose of the MCRBA.

18      MCRBA prohibits the “business” of accepting moneys for transmission to persons outside Singapore rather than the mere act to that effect. The intent of Parliament is to regulate the remittance industry, which comprises persons who offer remittances as a service in its own right rather than simply as an incident to their core business. 

19     Chinpo blindly received moneys from the DPRK entities and then paid the moneys to their intended payees, in respect of matters unconnected with its ship agency and ship chandelling services. Although Chinpo engaged the BOC to facilitate the 605 remittances, it had done so in its own name, thereby concealing the identity of the DPRK entities, which were the true payors. This was the very mischief that the MCRBA sought to avoid, and that Parliament sought to address through the licensing regime for remittance businesses under the MCRBA. Chinpo could not therefore rebut the presumption under s 2(2)(b) of the MCRBA that it had been carrying on a “remittance business”.

20     Chinpo was not in possession of a valid remittance license when it made the 605 remittances between 2 April 2009 and 3 July 2013. Accordingly, the MCRBA Charge had been established.

21      General deterrence is the main sentencing consideration for the MCRBA Charge. The objective of the system of licensing under the MCRBA is to bring all persons providing remittance services within the ambit of certain minimum legal and regulatory requirements and the supervision of the Monetary Authority of Singapore. In all, Chinpo performed 605 remittances without a licence over a period of about four years, which resulted in the remission of a staggering US$40,138,840.87. This was an offence of an unprecedented volume and over an unprecedented duration in Singapore. The maximum fine of S$100,000 was thus warranted.

This summary is provided to assist in the understanding of the Court’s judgment. It is not intended to be a substitute for the reasons of the Court.

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