1. The 1st and 2nd Appellants were executive directors of Upbest Group Limited (“Upbest”), a company listed on the Stock Exchange of Hong Kong (the “Stock Exchange”) involved in the business of money lending. The 3rd Appellant and his wife, the 4th Appellant, were directors and shareholders of Grand Field Group Holdings Limited (“Grand Field”), also a company listed on the Stock Exchange. 2. The 3rd and 4th Appellants, in order to bolster the falling share price of Grand Field, came up with a scheme to give a false impression of profitable activity. A company, Sino Richest Limited (“Sino Richest”), was incorporated to acquire the interest in a gas joint venture in Chongqing. Grand Field purported to acquire 75% of Sino Richest, the consideration being the issuing of 315 million Grand Field shares to the shareholders of Sino Richest, including a company called Logistic China Enterprise Limited (“Logistic China”). 3. In fact the 3rd and 4th Appellants never intended to proceed with the joint venture. In response to the Stock Exchange’s queries, the 3rd and 4th Appellants pretended that Grand Field had sold its interest in the joint venture back to Logistic China. This was the basis of their conviction on the conspiracy to defraud charge. 4. The Appellants put in place a circular fund flow arrangement to create a false picture that there had been a real re-acquisition by Logistic China from Grand Field. HK$32 million originated from Upbest and passed through a number of parties, including Logistic China, Ka Fong Industrial Limited (a subsidiary of Grand Field) and the 3rd Appellant. The money would eventually return to the source, Upbest. In relation to these circular payments, the Appellants were charged with conspiracy to deal with property known or believed to represent proceeds of an indictable offence (the “money laundering charge”), contrary to sections 25(1) and (3) of the Organized and Serious Crimes Ordinance (“OSCO”). The question in the Court of Final Appeal was whether the offence of money laundering could be committed where a person dealt with funds that were known not to derive from any offence but which were used in the furtherance of such an offence. 5. Section 2(6)(a) of OSCO relevantly defines “a person’s proceeds of an offence” as “any payments or other rewards received by him at any time… in connection with the commission of that offence”. The Respondent argued that section 2(6)(a) widens the concept of “proceeds of an indictable offence” in section 25(1) to extend to money or property received in circumstances in which such receipt may be said to be “in connection with” the commission of an indictable offence even if that money or property is known not to be tainted as a benefit received on account of the commission of such offence. 6. The Court of Final Appeal rejected the Respondent’s wide interpretation of OSCO. It held that the ordinary meaning of “proceeds” was money or property derived from the commission of an offence. Section 25A of OSCO imposes a duty to report suspected money laundering offences and makes express provision to cover property which “was used in connection with” or which “is intended to be used in connection with” an indictable offence, suggesting that the Respondent’s wide interpretation was wrong. The Court of Final Appeal also gave due weight to the words “or other rewards” in the phrase “payments or other rewards”. The payment must be in the nature of a reward, linking the payment and the commission of the offence. Further, the Court of Final Appeal accepted that, interpreting sections 2(6)(a) and 25(1) in the light of OSCO’s fundamental purpose, the word “proceeds” had to be understood to refer only to money or property which represented an economic benefit gained by the relevant defendant in connection with the commission of the underlying indictable offence. The HK$32 million from Upbest was not a benefit received in connection with the conspiracy to defraud charge and so did not represent the proceeds of that offence. In addition, adopting the Respondent’s wide interpretation would have detrimental policy consequences. 7. Accordingly, the Court of Final Appeal held that the money laundering charge was not established and unanimously allowed the appeal.