Money Laundering – fraud- tax evasion –theft -arms trafficking – drug trafficking

Money Laundering – fraud- tax evasion –theft -arms trafficking – drug trafficking

MONEY LAUNDERNG INTRODUCTION

A Definition

Money obtained from illegal activities such as fraud, tax evasion, people smuggling, theft, arms trafficking, drug trafficking, and other such corrupt practices is considered to be ‘dirty’. It needs to belaundered, or cleaned in order to legitimise or hide its illegal origins.

As such, although varying in complexity and sophistication, money laundering is a process whereby the proceeds of crime are converted into apparently legitimate money or other assets. Currently, there are 19 different offences of money laundering available under the Criminal Code. Unlike the United States, Australia differentiates between offences based on the value of the funds involved and the degree of knowledge of the offender. Generally, these can be classified into two types: those linked to the proceeds of crime (funds generated by an illegal activity) and those linked to the instruments of crime (funds used to conduct an illegal activity).

B Legislative Form 

The Australian Transaction Reports and Analysis Centre (‘AUSTRAC’) is Australia’s anti-money laundering and counter-terrorism financing regulator and specialist financial intelligence unit. Established in the 1989 under the Financial Transaction Reports Act 1988 (Cth), it continued to exist under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (‘AML/CTF Act’). Thus, The AML/CTF Act is the principal legislative instrument pertaining to money laundering. However, offence provisions are also contained in Division 400 of the Criminal Code Act 1995 (Cth) (‘Criminal Code’).

The Criminal Code contains a broader definition of money laundering in Division 400 to include more than just concealing the proceeds or instruments of crime. Namely, the Criminal Code makes it an offence to ‘deal with’ the proceeds of crime or instruments of crime, whereby ‘deal with’ is defined as a person receiving, possessing, concealing, or disposing of money or other property as well as importing or engaging in banking transaction relating to money or other property. However, where an innocent third party engages with the proceeds of the crime (such as a Western Union Remittance Officer), without knowledge of its origin, such receipt of money does not constitute to an offence under the Criminal Code.

AUSTRAC works collaboratively with Australian industries and businesses in their compliance with anti-money laundering and counter-terrorism financing legislation. For example, financial institutions in Australia are required to track significant cash transactions (greater than A$10,000.00 or equivalent in physical cash value) that can be used to finance terrorist activities in and outside Australia’s borders and report them to AUSTRAC.

Understandably, money laundering is a critical threat to Australia. First, in its ability to compromise the financial integrity of the nation, and second, due to its role as the common denominator almost all organised criminal activity.

II HOW DOES IT HAPPEN

Given its illegal origins, money laundering is a complex process. It occurs in areas ranging from banking to gaming, trade of luxury goods, as well as alternative remittance to cash intensive businesses. The two main ways it occurs are:

  • The movement of money or other property across borders (for example, international funds transfers, remittances, bulk cash smuggling and cross-border movement of bullion and jewellery)
  • The concealment of money or other property domestically (for example, purchasing high- value goods and real estate, gambling and putting money into legitimate businesses).

As such, the money laundering cycle involves the placement, layering and integration of these illegitimate funds.

III AN AUSTRALIAN FOCUS

At present, the money laundering environment in Australia consists of (a) Intermingling legitimate and illicit financial activity, (b) Engaging professional expertise by way of lawyers and bankers, (c) Engaging specialist money laundering syndicates, and (d) The ‘Internationalisation’ of the Australian Organised Crime environment.

A – Money LaunderingProperty Investment

Although other significant laundering channels include banking and gambling amongst others, perhaps the strongest threat to Australia comes from investment into property. Money is often laundered through real estate by complex corporate vehicles and loan arrangements, mortgage and investment schemes, and the manipulation of property values. Estimates indicate that up to $651 million worth of laundered funds have been invested into Australian real estate. Chinese investors are amongst the most popular with the Bank of China offering multiple ways to launder funds between China and Australia. It has also been noted that real estate agents and lawyers have been identified as a high money laundering risk in Australia, where regulations do not require them to report suspicious transactions.

The case of Chinese billionaire Hui Ka Yan’s illegal investment into the Australian market by way of a shelf-company has resulted in the Financial Action Task Force making recommendations to require lawyers, accountants, real estate agents and precious stones dealers to report suspicious transactions. While it is not clear as to whether this particular transaction included corrupted funds, there have been other cases where laundering has been evident.

In the case of R v Huang, R v Siu [2007] NSWCCA 259, the Court took into account the roles of the two other defendants in being mere mules with no interest in the money they laundered, resulting in a higher sentencing for a third-party, who was convicted of laundering more than $3 million and was sentenced to sixteen and a half years’ imprisonment in March 2008.

B – Sentencing

As noted above, possessing the proceeds or instruments of crime is a single offence under the Criminal Code (Division 400). Those receiving, possessing, concealing, importing into Australia, exporting from Australia, or disposing of the proceeds of crime may be guilty of this offence. Possessing the proceeds of crime attracts a maximum custodial sentence of two years.

The remaining 18 of the 19 offences of money laundering are those of dealing with the proceeds or instruments of crime (see above). These 18 offences are distinguished by the value of the property involved and the intent of the offender.

The first consideration means that the punishments’ severity increases with the value and with the offender’s knowledge of the source of the funds. The Criminal Code classifies offences according to the value of the funds involved into bands of $1,000,000 or more; $100,000 to $999,999; $50,000 to $99,999; $10,000 to $49,999; $1,000 to $9,999; and funds of any value.

The second consideration is rests in what level of knowledge the Crown is able to prove that the individual had with regard to the illegally obtained money. There are three offences within each monetary band, determined by the offender’s knowledge of the funds’ source or intended use:

1. Knowledge: the defendant is aware or believes that money or property is the proceeds of crime or will be used to commit an offence.

2. Recklessness: the defendant is aware of a substantial risk that money or property is the proceeds of crime or will be used to commit an offence.

3. Negligence: the defendant has failed to exercise a reasonable standard of care to ensure that money or property is not the proceeds of crime.

In essence,a defendant will be able to defend charges of money laundering if they are able to show that they had no reasonable grounds of knowing that the property/money was the proceeds of crime. It is to be noted that matters pertaining to money laundering are complex and may involve significant negotiations with the Commonwealth Director of Public Prosecutions in determining the appropriate charge.

If you have been charged for Money Laundering, Fraud, Tax Evasion, Arms Trafficking, Drug Trafficking, White Collar Crime contact Sydney’s leading Criminal Lawyers, we are one Sydney’s longest established Criminal Law Firms and only practice in Criminal Law. 02 9261-8640 if you need urgent legal advice our Criminal Lawyers are available 24 hours/7days

Money Laundering – Property Penalty Table

Section of the Criminal Code 400.3 400.4 400.5 400.6 400.7 400.8
Value of money/property $1million or more $100,000 or more $50,000 or more $10,000 or more $1000 or more Any value
Penalty Ss (1) Intention 25 years and/or 1500 p/units 20 years and/or 1200 p/units 15 years and/or 900 p/units 10 years and/or 600 p/units 5 years and/or 300 p/units 12 months and/or 60 p/units
Ss (2) Reckless 12 years and/or 720 p/units 10 years and/or 600 p/units 7 years and/or 420 p/units 5 years and/or 300 p/units 2 years and/or 120 p/units 6 months and/or 30 p/units
Ss(3) Negligent 5 years and/or 300 p/units 4 years and/or 240 p/units 3 years and/or 180 p/units 2 years and/or 120 p/units 12 months and/or 60 p/units> 10 p/units