Money Laundering, generally speaking, is the conduct of attempting to legitimise money from criminal proceeds, as well as financing the furtherance of criminal conduct.
It is widely accepted that massive amounts of funds are generated through illegal activity. However, once these funds are generated, attempts are made to implement them in the legitimate financial system. Consequently, there are a number of government authorities, which have been specially tasked with trying to detect this conduct and prosecute these alleged offences. Investigations can be complex and cover a lengthy period of time, but where people have been convicted of these offences, custodial sentences often follow.
Therefore, many people and companies are regularly under the spotlight of the authorities who are trying to detect money laundering crimes. These people and companies can be innocent but since certain types of conduct are targeted, they can find themselves in the middle of a large scale investigation. Importantly, if dealing with the authorities during the investigation is not properly handled with a considered legal approach; the person being investigated will invariably not only be charged but could also significantly take away from their future defence.
Australia has a complex approach to the criminalisation of money laundering. The starting point is that Division 400 of the Criminal Code Act 1995 (Cth) (the “Criminal Code”) contains the principal money laundering offences. Whilst there are a number of offences under this division there are two classified types of offences, which are:
Offences linked to proceeds of crime, which are funds generated by illegal activity; and Offences linked to the instruments of crime, which are funds used to conduct illegal activity.
These are then further classified according to the value of the funds involved in the following bands:
- $1,000,000 or more,
- $100,000 to $999,999,
- $50,000 to $99,999,
- $10,000 to $49,999, and
- $1,000 to $9,999.
Penalties range from maximum custodial sentences of 2 – 25 years. In addition to imprisonment, fines can also be imposed with the maximum being $255,000 where the property or money related to the dealing on the proceeds of crime is or exceeds $1,000,000.
Within each band there are then 3 offences based on the offender’s knowledge of the source of the funds or what the funds were intended to be used for. This in essence determines the culpability of the offender, which then designates the applicable penalty range.
Offender classifications are as follows:
- Knowledge: The offender ‘believes that the money or property is the proceeds of crime or intends that the money or property will become an instrument of crime’;
- Recklessness: The offender is ‘reckless as to the fact that the money or property is proceeds of crime or the fact that there is a risk that it will become an instrument of crime (as the case requires)’; and
- Negligence: The offender is ‘negligent as to the fact that the money or property is proceeds of crime or the fact that there is a risk that it will become an instrument of crime (as the case requires)’.
Often these cases involve complex commercial dealings relating to real estate, currencies and personal property such as jewellery and art work. In these types of cases there is a lot of scrutiny on the valuations or quantification of the property and the transactions involved.
This also then raises a potential defence of mistake of fact, which is available for some of the relevant offences. An example provided in the Criminal Code is as follows:
“Assume that a person deals with money or property that is the proceeds of crime. While the person believes it to be proceeds of crime, he or she is under a mistaken but reasonable belief that it is worth $90,000 when it is in fact worth $120,000.
That belief is a defence to an offence against subsection 400.4(1) (which deals with money or property of a value of $100,000 or more). However, the person would be guilty of an offence against subsection 400.5(1) (which deals with money or property of a value of $10,000 or more). Section 400.14 allows for an alternative verdict of guilty of an offence against subsection 400.5(1).”
Importantly, in this example, it is the defendant who bears the evidential burden relating to the mistake of fact defence.
As you can see there are many important considerations which must be carefully considered when a person finds themselves in the midst of an investigation and potentially a subsequent prosecution.
In addition to the above provisions, there are also an array of State based offences which are often linked with the money laundering charges. These can include but are not limited to, Trafficking in Dangerous Drugs, Supplying Dangerous Drugs, Tax Fraud and other Fraud and Dishonesty related offences and Bribery.
On initiating charges the Crown will also seize assets and freeze bank accounts. Frequently, even when only a portion of the source funds were illegitimate, the legitimate funds are also seized. This then requires negotiations and potential court intervention to claw back what was lawfully obtained.
There can then also be concurrent proceedings initiated from disciplinary bodies, third party claimants and other potential stakeholders. This requires decisive action on all fronts.
Being investigated or being before the courts can be a very stressful and daunting time. As expert corporate criminal lawyers we understand the dealings involved in business transactions and the commercial realities that are required in business. We also understand the complex nature of the relevant State and Commonwealth legislation and the broad powers of the investigating authorities.
Our team of corporate, commercial and criminal lawyers bring a collaborative approach which is required to pre-empt, crisis manage and defend when our clients are subjected to these matters.