money laundering

Author: Nyman Gibson Miralis

Subject: Money Laundering and Sentencing Principles

Keywords: money laundering, sentencing principles, criminal code, Proceeds of Crime Act

 

In the years 2014 to 2015, the Commonwealth Director of Public Prosecutions recovered $5,996,584.00 from its money laundering prosecutions in Australia. To put this in perspective, the International Monetary Fund estimate that the size of money laundering falls somewhere between 2% to 5% of global GDP.  As financial systems become more connected, incidents of money laundering will only increase.

The Commonwealth offences for money laundering are contained in Part 10.2 of the Criminal Code 1995 (Cth), with the level of seriousness and punishment determined by the amount of money or property alleged to be involved in the offence. So what are the sentencing principles that guide a judge in sentencing an offender convicted of money laundering? And how does the Commonwealth confiscate that money?

 

Sentencing principles for money laundering offences

In Wing Cheong Li [2010] NSWCCA 125, Barr AJ held that:

“Although the number of money laundering cases dealt with by the appellate courts is growing, it is still small. The cases do not even begin to trace the limits of the range of proper sentencing discretion. They can do no more in my opinion than produce a broad indication of the developing sentencing practice.”

This case was decided in 2010 – and since then, various sentencing principles guiding the exercise of judicial discretion have emerged. The following principles can be distilled from the case law:

  1. The Criminal Code has a graduated series of offences of increasing seriousness depending on the value of the money and the offender’s state of mind.
  2. The offender’s mental state is relevant to the seriousness of the event. That is to say, a person who intends to deal with the proceeds of crime is more culpable than someone who negligently deals with the proceeds of crime.
  3. The amount of money involved is a highly significant factor and one of the  primary identifier of what the maximum penalty should be.
  4. A number of transactions involving small amounts of money over a longer period of time will be more serious than a single transaction of a large sum. This is because the latter can be seen as an isolated offence.
  5. Money laundering offences are not only concerned with the source of the money, but also its ultimate use. This reflects the provision in Part 10.2 which criminalises two discrete groups of money laundering offences. The first group relates to funds generated by an illegal activity, that is, proceeds of crime. The second group deals with funds used to conduct an illegal activity – in other words, using funds with intention to commit an offence.
  6. Money laundering is an offence that warrants severe punishment to enshrine principles of general deterrence. Where the offender derives profit over a significant period of time, and over a large number of transactions, prior good character is of less significance.
  7. Knowledge as to the illegality of the conduct increases the seriousness of the offence.

The following cases are a few examples that highlight the court’s approach to sentencing a person convicted of a money laundering offence.

 

Abdallah (No 3) [2015] NSWSC 121 – Attempt to take $10,000 out of Australia

Mr Islam organised, for himself and eight other people, a number of business and first class tickets from Sydney to Dhaka. The group met up at Sydney Airport whereupon Islam distributed cash in the sum of $1,023,900.00 between them all. This cash was placed in various suitcases. Each person’s outgoing immigration card was marked with an “X” to indicate that there were not taking over $10,000.00 outside Australia. Customs Officers searched each of the people involved. Abdallah was one of the offenders involved, and was charged with dealing with money intending that it would become an instrument of crime to a value of more than $1,000,000.00.

In sentencing, the judge held that ‘the importance of general deterrence in sentencing for money laundering offences has been repeatedly emphasised.’  The judge held that Abdallah’s prospects of rehabilitation were somewhat limited because of his propensity to become a willing participant in the offence. Abdallah’s dishonesty when he filled out the outgoing immigration card also required a measure of general deterrence. Accordingly, Abdallah was sentenced to a term of imprisonment of 18 months, to be released after 9 months upon entering into a good behaviour bond for 3 years after.

 

Shi [2014] NSWCCA 276 – Multiple and periodic deposits reasonably suspected to be proceeds of crime

Ms Shi developed a friendship with an “aunty”, who was a significant figure in black money schemes. The scheme involved Super Forex (a currency transfer company), Westpac, Mr Liu, Ms Shi, and the Aunty. At the behest of Aunty, Shi would received large sums of money from Liu, and deposited that money into a Super Forex account in Westpac. Over the course of 4 months, many deposits were made at Westpac, which attracted the attention of Westpac employees. Shi tried to ameliorate their concerns and lied about her being an employee with Super Forex. When charged, Shi had deposited over $35 million. She was charged with dealing with property reasonably suspected to be the proceeds of crime, contrary to section 400.9(1) of the Criminal Code.

The court held that ‘objectively, the unlawful movement of such sums of money is calculated to cause very serious economic and commercial damage to the Australian economy and to the interests of the Australian people.’  Having also considered Shi’s subjective circumstances, the Court concluded that ‘in all of the circumstances nothing other than a sentence of full time custody of a substantial kind would serve to satisfy relevant sentencing objectives’ She was sentenced to an overall sentence of 4 years 9 months.

 

Ly [2014] NSWCCA 78 – lodging false income tax returns

In this matter, Ms Ly committed a series of frauds by lodging 24 false income tax returns involving the identity theft of 21 taxpayers. The 24 tax refunds totalled $357,568.00 and paid into seven bank accounts controlled by Ly. A jury convicted Ly for the offence of dealing with proceeds of crime in the value of over $100,000.

The court characterised the offence as objectively above the mid-range of seriousness because of the pattern of Ly’s offending behaviour, the fact that there were 24 payments totalling $357,568.00, the significant degree of planning undertaken, and the financial benefit Ly gained from the offence. The court found that no sentence other than imprisonment was appropriate, and fixed a term of 8 years, and a non-parole period of 4 years 6 months.

 

Post-sentence proceedings

At the conclusion of the sentence hearing, parallel civil proceedings will also draw to a close. The money said to be the proceeds of crime will be confiscated or forfeited to the Commonwealth under provisions of the Proceeds of Crime Act 2002 (Cth). Under these provisions, a conviction for some offences will automatically result in the making of a statutory forfeiture order whereby the proceeds will automatically go to the state; or it may provide the basis for the making of a confiscation order.

For more information about the operation of the Proceeds of Crime Act, please click on the link above.

 

Nyman Gibson Miralis are experts in transnational money laundering investigations, assisting companies and individuals who are the subject of investigations by AUSTRAC, the AFP, ATO and ACIC. If you require assistance, contact one of our expert criminal defence lawyers