Well you are all basically right and wrong.
That saying is a very old saying.
When you are talking business or relationship with a person, and they have a perpetual smile on their face, that is, a devious smile, then you can't trust them.
Normally you will see these smiles on people who are self-centred, and are only out to get what they want from you.
Like the smile on a caryard salesperson, even some pastors smile like a "cheshire cat".
Those who smile like this cannot be trusted, and I am sure many Christians in their discernment have seen this many times.
Keep away from them, they are up to no good!