Money Laundering Law

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Money laundering Law

Author: Phillip Gibson, Accredited Specialist Criminal Law and Criminal Defence Lawyer.

What is money laundering?

Money Laundering Computer Keyboard

The process of turning “dirty money”, that is, money that is the proceeds of crime, into “clean money” is called money laundering. Usually, money laundering matters are factually complicated, involve detailed financial analysis and complex evidence and require considerable negotiations with the prosecuting authorities and, in some cases, overseas investigatory bodies. In Australia, money laundering is an offence at both a State and Federal level and is treated as a very serious crime. So much is reflected in the penalties for money laundering, which are seen by many as being harsh. If you are charged under Commonwealth laws, you could be facing a maximum penalty of up to 25 years imprisonment (or up to 20 years imprisonment if you are charged under NSW laws).

Commonwealth money laundering scheme

Part 10.2 of the Criminal Code Act 1995 (Cth) creates a total of 38 money laundering offences which are found:

  • Between sections 400.3 and 400.8 Criminal Code – dealing in proceeds of crime/instruments of crime; and
  • In section 400.9 Criminal Code – dealing with property reasonably suspectedof being proceeds of crime/instruments of crime.

Each of the sections between 400.3-400.8 contain six separate offences (three for proceeds and three for instruments) and all are similarly drafted. As you can see from the below table, what section you are charged with depends on the value of the money or property you are alleged to have dealt in and on your state of mind i.e. whether you knew what you were doing or whether you turned a blind eye to a crime:

 

State of mind

400.3

400.4

400.5

400.6

400.7

400.8

Value of money / property

 

$1m or more

$100,000 or more

$50,000 or more

$10,000 or more

$1,000 or more

Any amount

Maximum penalty

Subs (1)
Intention

25 years and/or

20 years

15 years

10 years

5 years

12 months

Subs (2)
Reckless

12 years

10 years

7 years

5 years

2 years

6 months

Subs (3)
Negligent

5 years

4 years

3 years

2 years

12 months

Fine

If you are charged with an offence between 400.3 and 400.8 of the Criminal Code, the prosecution must prove:

  • The existence of money (loosely defined as money, property, or other things including financial instruments);
  • A dealing – the essential physical conduct which can include possessing the money/property, concealing or disposing it or engaging in banking transactions;
  • That your dealing in money/property was unlawful because:
      • The proceeds are proceeds of a crime (i.e. profits came from a crime) OR the proceeds are going to be at risk of being an instrument (that is, the profits can be used in the commission of or used to facilitate the commission of a crime);

AND

      • You believed it was proceeds of a crime OR were reckless or negligent about that.

Here’s a basic diagram to help you understand offences between 400.3 and 400.8 Criminal Code:               

PROCEEDS
(coming from crime)  

OR

 INSTRUMENT
(going to crime)

 

DEALING
(with a guilty mind)   

 
Money Laundering AML Law Flow

If, on the other hand, you are charged with an offence under section 400.9 of the Criminal Code, the prosecution has to prove that:

  • you have dealt with money/property; and
  • that it is reasonable to suspect that the money/property is the proceeds of crime.

While you might think that this would be more difficult for the prosecution to prove, it is in fact easier. The prosecution don’t actually have to have evidence of an unlawful dealing taking place; they only need enough evidence to establish that they had a reasonable suspicion that the money/property you were caught dealing with is derived from a crime i.e. from selling drugs.

See our article on the case of Lin v R [2015] NSWCCA 204 for more information on what the prosecution have to prove in relation to section 400.9 of the Criminal Code.

Here is a summary of the maximum penalties for an offence under section 400.9:

 

400.9(1)

400.9(1A)

Value of money / property

$100,000 or more

Under $100,000

Maximum penalty

3 years

2 years

Interestingly, there are generally more prosecutions under section 400.9 than there are under each of sections 400.3-400.8. For example, between January 2011 and January 2016, a total of 63 prosecutions heard in the District Court under section 400.9(1) were proved by the Commonwealth Director of Public Prosecutions – 68% of which resulted in a term of imprisonment. On the other hand, only 15 prosecutions heard in the District Court under section 400.3(1) were proved by the CDPP during that same period – 100% of which resulted in a term of imprisonment.

NSW Money Laundering Scheme

In NSW, money laundering charges are brought pursuant to Part 4AC of the Crimes Act 1900 (NSW). The proof material and sentencing considerations for money laundering charges brought by the NSW DPP are very similar to those under the Commonwealth scheme. What section you are charged with, however, does not depend on the amount of money/property an accused is alleged to have dealt in. Rather, the offences and the maximum penalties are set according to the level of knowledge and involvement of the individual in the commission of the offence. The below table summarises the offences and penalties:

 

193B(1)

193B(2)

193B(3)

193D(1)

193D(2)

State of mind

Knowing and intent to conceal proceeds

Knowing proceeds are those of crime

Reckless as to whether proceeds are those of crime

Intent that property will become instrument of crime

Reckless as to whether property will become instrument of crime

Maximum penalty

20 years

15 years

10 years

15 years

10 years

In addition, under s 193C(1) of the Crimes Act, you could be charged with dealing with property that is reasonably suspected to be the proceeds of crime. The maximum penalty for this summary offence is 2 years imprisonment.

Money Laundering Related Offences

Often, money laundering charges are coupled with other charges such as drug-supply, fraud or tax evasion. You might even be charged with offences under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) or the Financial Transactions Reporting Act 1988 (Cth) for opening bank accounts in false names or moving amounts of less than $10,000 both in and out of Australia. However, that is not always the case. Nor is it the case that the prosecution have to prove the commission of a “crime” for you to be charged with dealing in the “proceeds of crime”. For example, if you are charged with drug-supply and money laundering, you might be found not guilty of drug-supply but guilty of laundering money derived from the proceeds of a drug-supply. Similarly, just because money is clean and derived from a legitimate source, it does not necessarily mean there is no offence – for example, money legitimately earned but dealt with in such a way as to disguise its source for the purpose of defrauding the tax office (R v Ansari (2007) 70 NSWLR 89 at [120]).

Money Laundering Sentencing Considerations

As a result of the many different methods of laundering and the complex money trails that laundering sometimes leaves behind, it is sometimes difficult to identify how serious an offence is.

The breadth of conduct captured by money laundering offences is wide ranging and constitutes a “21st century response to antisocial and criminal conduct, commonly with international [and technological] elements” (R (Cth) v Milne (No 1) [2010] NSWSC 932 at [164]). While the source, destination and ultimate use of the laundered funds are relevant considerations when being sentenced for money laundering, the most important consideration is what the offender actually did (R v Ansari (2007) 70 NSWLR 89 at [119]). Generally, a number of transactions involving small amounts of money will be more serious than a single transaction of a larger amount as the latter may be seen as an isolated matter.

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