Money laundering is a serious crime that involves the conversion or transfer of funds obtained illegally into seemingly legitimate funds. The process of money laundering is used to disguise the illicit origin of funds and make them appear as though they have been obtained legally. Every year, billions of dollars of illicit funds are transferred throughout Australia, with a direct and substantial cost to the legitimate national economy.
Overview of Laws in Australia
Criminal Code Act 1995 (Cth)
Money laundering is an offence prohibited at a Federal level under Part 10.2 of the Criminal Code Act 1995 (Cth) (‘Criminal Code’). The provisions cover a variety of offending conduct relating to property that is used in connection with serious crime.
Division 400 of the Criminal Code include offence provisions which make it an offence to deal with or receive, possess, conceal, dispose, import, export or engage in a banking transaction relating to money or property which represents proceeds or an instrument of crime.
Property will be classified as proceeds of crime under the Criminal Code if it is wholly or partly derived or realised (directly or indirectly) by any person from the commission of an indictable offence against a law of the Commonwealth, a State, a Territory or a foreign country.
Property will be classified as an instrument of crime if it is used in the commission of, or used to facilitate the commission of, an indictable offence against a law of the Commonwealth, a State, a Territory or a foreign country.
The corresponding maximum penalties for offences set out under Part 10.2 of the Criminal Code vary based on the value of the property dealt with and the fault element demonstrated on the part of the accused. The Criminal Code contains a tiered system of seriousness. There are three offences within each band, determined by the offender’s knowledge of the funds’ source or intended use (namely knowledge, recklessness or negligence). Maximum penalties vary from life imprisonment to 12 months imprisonment, dependant on the offence charged.
The Criminal Code offence provisions have extraterritorial jurisdiction and are not limited to conduct which occurs within Australia’s national borders.
Crimes Act 1900 (NSW)
There are also parallel money laundering offences prescribed under Australian State and Territory legislation. In NSW, money laundering is criminalised under Part 4AC of the Crimes Act 1900 (NSW) (‘Crimes Act’).
The term proceeds of crime is defined under the Crimes Act as any property that is substantially derived or realised, directly or indirectly, by any person from the commission of a serious offence. Broadly, there are two tiers of offending conduct: dealing with proceeds of crime knowing that the property dealt with is the proceeds of crime and dealing with proceeds of crime reasonably suspected to be proceeds of crime. Again, dependant on the level of knowledge and the value of the property, maximum penalties range from 20 years imprisonment to 3 years imprisonment.
It is important to note that both the Criminal Code 1995 (Cth) and the Crimes Act 1900 (NSW) apply not only to individuals, but also to businesses. This means that companies and corporations can be held liable for money laundering offences committed by their employees or representatives.
In addition to the prosecution of criminal offences, civil proceedings can be brought at both a Federal and State level to restrain and secure forfeiture of property found (or suspected) to be proceeds of crime.
Money Laundering Typologies
Money laundering is a complex and evolving criminal activity that requires innovative strategies to combat. The Australian Criminal Intelligence Commission (ACIC) regularly updates its list of money laundering typologies to educate law enforcement agencies of the latest methods used by criminals and criminal organisations. The most recent list of money laundering typologies published by ACIC includes the following:
1. Cash Intensive Businesses: This involves the use of cash-based businesses, such as casinos, to launder large amounts of money.
2. Real Estate: Criminals purchase real estate properties and use them to launder money by overvaluing the properties or using false invoices.
3. Trade-Based Money Laundering: This typology involves using trade transactions to launder money by inflating the value of goods or services.
4. Structuring: This involves breaking down large transactions into smaller ones to avoid detection by financial institutions.
5. Virtual Currency: Criminals are using virtual currencies, such as cryptocurrency, to launder money as they can be easily converted into fiat currency without being traced.
6. Fraudulent Invoicing: Criminals use false invoices to launder money by inflating the value of goods or services.
7. Charity and Non-Profit Organizations: Criminals use charitable and non-profit organizations as a front for money laundering activities.
The ACIC’s list of money laundering typologies is a valuable resource for law enforcement agencies, as well as financial institutions, to understand the latest trends and methods used by criminals in the money laundering process. While law enforcement agencies are familiar with such money laundering typologies, the above list is not restricted. Both Federal and State legislation capture a wide scope of offending conduct.
Money laundering is a serious offence with severe consequences. The Criminal Code, the Crimes Act and other State based criminal legislation in Australia prescribe severe penalties for persons found guilty of the practice. It is essential for individuals and businesses to be aware of their obligations and to take steps to ensure that their financial dealings are compliant with the law.
Should you be subject to an investigation by law enforcement or criminal proceedings relating to money laundering, it is essential that you receive legal advice. To arrange a conference to discuss your options, call our Sydney Office of Hugo Law Group on (02) 9696 1361, our Canberra Office on (02) 5104 9640 or our Perth office on (08) 6255 6909 to make an appointment to speak to one of our lawyers.
Damien Mahon, Associate