The Law, Defences and Penalties for Dealing in the Proceeds of Crime

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Classic Cars

The Australian Federal Police (AFP) has boasted the seizure of 47 vehicles, including 31 classic cars, as well as gold bullion and cash with a combined value of around $5 million, which they say was connected to a 46-year old Sydney man who was sentenced to 11 years in prison over the importation of 144 kilograms of cocaine.

“Organised crime groups are motivated by greed and an intent to make illicit profits so we work tirelessly with our partners to disrupt their criminal activities and remove their ill-gotten wealth,” said AFP Commander Stephen Fry.

“Profits from criminal activities also form a vicious circle as cash and other assets are used to fund the next drug import or pay for the next grow house or help criminals evade law enforcement.”

“The AFP’s ability to break the cycle and seize these profits sends a strong message to criminals that their luxury lifestyles are an illusion which will inevitably disappear after police knock on their door.”

Criminal Assets Confiscation Taskforce

In 2011, a multi-agency taskforce comprised of the AFP, Australian Taxation Office, Australian Criminal Intelligence Commission, AUSTRAC and Australian Border Force was formed whose objective was, and continues to be, to identify, pursue and confiscate criminal assets and gather evidence with a view to prosecuting those responsible for deriving them.

According to Commander Fry, the taskforce, known as the Criminal Assets Confiscation Taskforce, has been successful in disrupting numerous organised crime groups by seizing their assets and prosecuting those suspected of being responsible for related criminal conduct.

Laws relating to the proceeds of crime

The Criminal Code Act 1995 (Cth) contains offences related to dealing in the proceeds of crime, the penalties for which depend on the value of the proceeds involved.

In addition to this, each Australian state and territory has laws which not only criminalise those who deal in money and assets derived from criminal activity, but which empower law enforcement agencies to seize and dispose of the items.

Currently, Victoria is the jurisdiction with the strictest laws, enabling law enforcement to seize all the assets of suspected persons, not just assets connected with criminal activity. 

Essentially, this non-conviction-based recovery approach means that police don’t even need to prove a person guilty before they can seize their property.

The offence of dealing with suspected proceeds of crime in New South Wales

Dealing with suspected proceeds of crime is an offence under section 193C of the Crimes Act 1900 which carries a maximum penalty of 3 years in prison.

To establish the offence, the prosecution must prove beyond reasonable doubt that:

  1. You dealt with property,
  2. There are reasonable grounds to suspect the property was the proceeds of crime, and
  3. The value of the property at the time of dealing was less than $100,000.

The maximum penalty increases to 5 years in prison where the value of the property at the time of dealing was $100,000 or more.

What is the meaning of ‘deal with’?

For the purpose of proceeds of crime offences, ‘deal with’ includes:

  1. Receiving, possessing, concealing or disposing of,
  2. Bringing or causing to be brought into NSW, by electronic transfer, and
  3. Engaging directly or indirectly in a transaction, including receiving or giving a gift

What is the meaning of ‘proceeds of crime’ in New South Wales?

‘Proceeds of crime’ is defined as property that is substantially derived or realised, directly or indirectly, by any person from the commission of a serious offence.

‘Serious offence’ is defined as:

  1. Any offence that can be prosecuted ‘on indictment’ (ie in a higher court such as the District or Supreme Court),
  2. Supplying a restricted substance, or
  3. An offence committed outside NSW that would constitute the above if it were committed within the state.

What are ‘reasonable grounds’ for suspecting property is the proceeds of crime?

The section provides a list of situations which amount to ‘reasonable grounds’ for suspecting property is the proceeds of crime.

These include where:

  1. The dealing involves accounts in false names,
  2. You state the dealing was for another person but fail to give that person’s details, and
  3. There are several transactions that appear to be structured to avoid reporting requirements.

Statutory defence

The legislation provides that you are not guilty of the offence if you are able to establish ‘on the balance of probabilities’ that you had no reasonable grounds to suspect the property was derived from crime.

Other legal defences 

In the event that you are able to raise evidence of a legal defence to a proceeds of crime charge, the prosecution must then disprove that defence beyond a reasonable doubt.

If it is unable to do so, you are entitled to an acquittal; in other words, a verdict of not guilty.

Legal defences to proceeds of crime charges include:

  1. Self-Defence,
  2. Duress, and
  3. Necessity.

The offence of money laundering in New South Wales

Another New South Wales offence which involves proceeds of crime is ‘money laundering’ which is an offence under section 193B of the Crimes Act 1900 and is treated more seriously than charges under section 193C.

This is because, to establish the offence of money laundering, the prosecution is required to prove that the money and/or assets derive are not merely suspected of being the proceeds of crime but are actually just that.

The maximum penalty for money laundering depends on your state of mind and conduct, namely whether you were reckless as to whether the proceeds were derived from crime or whether you actually knew they were, and also whether you attempted to conceal those proceeds.

The maximum penalty is 10 years in prison where the prosecution is able to prove beyond reasonable doubt that:

  1. You dealt with proceeds of crime, and
  2. You were reckless as to whether the proceeds were derived from crime.

The maximum penalty increases to 15 years where the prosecution proves that:

  1. You dealt with proceeds of crime, and
  2. You knew the proceeds were derived from crime.

The maximum increases to 20 years where the prosecution proves that:

  1. You dealt with proceeds of crime,
  2. You knew the proceeds of crimes were derived from crime, and
  3. You intended to conceal that the proceeds were derived from crime.

The definitions of derived from, proceeds of crime and serious offence are the same as those for section 193C, and the available legal defences are also the same.

Commonwealth offences of dealing in the proceeds of crime 

Chapter 10, Part 10.2, Division 400 (sections 400.1 to 400.9) of the Criminal Code Act 1995 (Cth) is titled ‘Money Laundering’ and sets out a number of offences relating to dealing in the proceeds of crime, as well as the definitions that relate to those offences.

These laws apply across Australia.

The maximum penalties that apply to these offences are determined according to your state of mind at the time of the offence – namely, whether your conduct was negligent, reckless or intentional, as well as the value of the proceeds derived.

The following table contains:

  1. The relevant offence sections of the Criminal Code Act 1995 (Cth), 
  2. The names of the offences,
  3. The ‘essential elements’ of each offence, which are the ingredients the prosecution is required to prove beyond a reasonable doubt in order to establish the offence, and
  4. The maximum penalty that applies:
Section of Criminal Code Act Name of offence / essential elements Maximum penalty
400.3(1)  Intentionally dealing in proceeds of crime – $1,000,000 or more 
  1. You dealt with money or other property
  2. The money or property was, and you believed it was, the proceeds of crime, or you intended for it to become an instrument of crime, and
  3. The value of the money and/or property was $1,000,000 or more.
25 years
400.3(2) Recklessly dealing in proceeds of crime – $1,000,000 or more 
  1. You dealt with money or other property
  2. The money or property was the proceeds of crime, or there was a risk it would become an instrument of crime
  3. You were reckless as to whether the money or property was the proceeds of crime or would become an instrument of crime, and
  4. The value of the money and/or property was $1,000,000 or more.
12 years
400.3(3) Negligently dealing in proceeds of crime – $1,000,000 or more 
  1. You dealt with money or other property
  2. The money or property was the proceeds of crime, or there was a risk it would become an instrument of crime
  3. You were negligent as to whether the money or property was the proceeds of crime or would become an instrument of crime, and
  4. The value of the money and/or property was $1,000,000 or more.
5 years
400.4(1) Intentionally dealing in proceeds of crime – $100,000 or more 
  1. You dealt with money or other property
  2. The money or property was, and you believed it was, the proceeds of crime, or you intended for it to become an instrument of crime, and
  3. The value of the money and/or property was $100,000 or more.
20 years
400.4(2) Recklessly dealing in proceeds of crime – $100,000 or more 
  1. You dealt with money or other property
  2. The money or property was the proceeds of crime, or there was a risk it would become an instrument of crime
  3. You were reckless as to whether the money or property was the proceeds of crime or would become an instrument of crime, and
  4. The value of the money and/or property was $100,000 or more.
10 years
400.4(3) Negligently dealing in proceeds of crime – $100,000 or more 
  1. You dealt with money or other property
  2. The money or property was the proceeds of crime, or there was a risk it would become an instrument of crime
  3. You were negligent as to whether the money or property was the proceeds of crime or would become an instrument of crime, and
  4. The value of the money and/or property was $100,000 or more.
4 years
400.5(1) Intentionally dealing in proceeds of crime – $50,000 or more 
  1. You dealt with money or other property
  2. The money or property was, and you believed it was, the proceeds of crime, or you intended for it to become an instrument of crime, and
  3. The value of the money and/or property was $50,000 or more.
15 years
400.5(2) Recklessly dealing in proceeds of crime – $50,000 or more 
  1. You dealt with money or other property
  2. The money or property was the proceeds of crime, or there was a risk it would become an instrument of crime
  3. You were reckless as to whether the money or property was the proceeds of crime or would become an instrument of crime, and
  4. The value of the money and/or property was $50,000 or more.
7 years
400.5(3) Negligently dealing in proceeds of crime – $50,000 or more 
  1. You dealt with money or other property
  2. The money or property was the proceeds of crime, or there was a risk it would become an instrument of crime
  3. You were negligent as to whether the money or property was the proceeds of crime or would become an instrument of crime, and
  4. The value of the money and/or property was $50,000 or more.
3 years
400.6(1) Intentionally dealing in proceeds of crime – $10,000 or more 

o establish the offence, the prosecution must prove beyond reasonable doubt that:

  1. You dealt with money or other property
  2. The money or property was, and you believed it was, the proceeds of crime, or you intended for it to become an instrument of crime, and
  3. The value of the money and/or property was $10,000 or more.
10 years
400.6(2) Recklessly dealing in proceeds of crime – $10,000 or more 
  1. You dealt with money or other property
  2. The money or property was the proceeds of crime, or there was a risk it would become an instrument of crime
  3. You were reckless as to whether the money or property was the proceeds of crime or would become an instrument of crime, and
  4. The value of the money and/or property was $10,000 or more.
5 years
400.6(3) Negligently dealing in proceeds of crime – $10,000 or more 
  1. You dealt with money or other property
  2. The money or property was the proceeds of crime, or there was a risk it would become an instrument of crime
  3. You were negligent as to whether the money or property was the proceeds of crime or would become an instrument of crime, and
  4. The value of the money and/or property was $10,000 or more.
2 years
400.7(1) Intentionally dealing in proceeds of crime – $1,000 or more
  1. You dealt with money or other property
  2. The money or property was, and you believed it was, the proceeds of crime, or you intended for it to become an instrument of crime, and
  3. The value of the money and/or property was $1,000 or more.
5 years
400.7(2) Recklessly dealing in proceeds of crime – $1,000 or more
  1. You dealt with money or other property
  2. The money or property was the proceeds of crime, or there was a risk it would become an instrument of crime
  3. You were reckless as to whether the money or property was the proceeds of crime or would become an instrument of crime, and
  4. The value of the money and/or property was $1000 or more.
2 years
400.7(3) Negligently dealing in proceeds of crime – $1,000 or more
  1. You dealt with money or other property
  2. The money or property was the proceeds of crime, or there was a risk it would become an instrument of crime
  3. You were negligent as to whether the money or property was the proceeds of crime or would become an instrument of crime, and
  4. The value of the money and/or property was $1,000 or more.
12 months
400.8(1) Intentionally dealing in proceeds of crime – any value
  1. You dealt with money or other property, and
  2. The money or property was, and you believed it was, the proceeds of crime, or you intended for it to become an instrument of crime.
12 months
400.8(2) Recklessly dealing in proceeds of crime – any value
  1. You dealt with money or other property
  2. The money or property was the proceeds of crime, or there was a risk it would become an instrument of crime, and
  3. You were reckless as to whether the money or property was the proceeds of crime or would become an instrument of crime.
6 months
400.8(3) Negligently dealing in proceeds of crime – any value
  1. You dealt with money or other property
  2. The money or property was the proceeds of crime, or there was a risk it would become an instrument of crime, and
  3. You were negligent as to whether the money or property was the proceeds of crime or would become an instrument of crime.
10 penalty units

The next three offences are the Commonwealth equivalents of the New South Wales offence of dealing with suspected proceeds of crime under section 193C.

400.9(1) Dealing in property reasonably suspected of being proceeds of crime – $100,000 or more
  1. You dealt with money and/or property
  2. It was reasonable to suspect the money and/or property was the proceeds of crime, and
  3. The value of the money and/or property was at least $100,000.
3 years
400.9(1AB) Dealing in property reasonably suspected of being proceeds of crime – $1000,000 or more
  1. You dealt with money and/or property
  2. It was reasonable to suspect the money and/or property was the proceeds of crime, and
  3. The value of the money and/or property was at least $1 million.
4 years
400.9(1AA) Dealing in property reasonably suspected of being proceeds of crime – $10,000,000 or more
  1. You dealt with money and/or property
  2. It was reasonable to suspect the money and/or property was the proceeds of crime, and
  3. The value of the money and/or property was at least $10 million.
5 years

It is important to note that, for all offence that contain dollar values, you are not guilty if you are able to establish ‘on the balance of probabilities’ that you mistakenly but reasonably believed the value of the money or property was less than the specified amount.

In that case, however, you may be found guilty of an alternative, less-serious offence.      

Definitions 

The Act outlines the meaning of the terms used above as follows:

What is the definition of ‘dealt with’ property?

A person ‘dealt with’ money or property if he or she:

  1. Received, possessed, concealed or disposed of it,
  2. Imported it into, or exported it from, Australia, or
  3. Engaged in a banking transaction relating to it.

What is the definition of importing or exporting in the context of proceed of crime?

‘Importing’ or ‘exporting’ includes physical transfer of property or money, as well as transferring funds or property by electronic communication.

What is property?

‘Property’ means real or personal property of any description, whether in Australia or elsewhere, whether tangible or intangible, including any interest in the property. The definition encompasses financial instruments, cards and other objects that represent or can be exchanged for money.

What is proceeds of crime?

‘Proceeds of crime’ means property that is wholly or partly derived or realised, directly or indirectly, by any person from the commission of an offence against the Commonwealth, a State or Territory, or a foreign country, that may be dealt with as an indictable offence.

What is an indictable offence?

An ‘indictable offence’ is one which may be dealt with in a higher court such as the District or Supreme Court.

What is an instrument of crime?

An ‘instrument of crime’ is money or property used in the commission of, or to facilitate the commission of, an offence against the Commonwealth, a State or Territory, or a foreign country, that may be dealt with as an indictable offence.

What is the meaning of reckless?

A person is ‘reckless’ if he or she is aware there was a substantial risk that the money or property is the proceeds of crime, or that there is a risk it will become an instrument of crime and it is unjustifiable to take that risk, but he or she goes ahead with the actions regardless.

What is the meaning of negligent?

A person is ‘negligent’ if:

  1. His or her conduct represents a great falling short of the standard of care that a reasonable person would exercise in the circumstances, and
  2. There is such a high risk the money or property in question is the proceeds of crime or will become an instrument of crime as to require that your conduct merits criminal punishment.

Legal defences 

Like the New South Wales offences, the legal defences to Commonwealth proceeds of crime charges include self-defence, duress and necessity.

What happens to assets that are the proceeds of crime? 

Assets that are determined to be the ‘proceeds of crime’ are sold and the proceeds of the sale are returned to the Commonwealth and placed into the Confiscated Assets Account.

This account is managed by the Australian Financial Security Authority (AFSA) on behalf of the Commonwealth. 

Victims may be able to recoup losses by applying through this mechanism.

A case in point: Melissa Caddick

For example, luxury cars owned by suspected fraudster Melissa Caddick were sold at auction earlier this year for more than $300,000, and part of the proceeds were returned to those she allegedly defrauded.

Ms Caddick vanished in 2020 owing more than $20 million to investors. At the time, she was under investigation by the Australian Securities and Investments Commission (ASIC) which found she was operating a Ponzi scheme without a valid financial services licence. 

Ms Caddick’s foot was later found on a Sydney beach, and she is still missing, although presumed dead. 

While she disappeared owing 72 people, including her parents, a total of $23 million, liquidators say they are only likely to recover about $15 million by selling off her assets.

Suspected of or charged with a proceeds of crime offence?

If you have are suspect of dealing in the proceeds of crime, or have been charged with a proceeds of crime offence, call Sydney Criminal Lawyers anytime on (02) 9261 8881 to arrange a conference with an experienced, specialist criminal defence lawyer who will advise your options, the best way forward and fight for the optimal outcome.

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Authors

Ugur Nedim

Ugur Nedim

Ugur Nedim is an Accredited Criminal Law Specialist with 25 years of experience as a Criminal Defence Lawyer. He is the Principal of Sydney Criminal Lawyers®.

Sonia Hickey

Sonia Hickey is a freelance writer, magazine journalist, and owner of 'Woman with Words'. She has a strong interest in social justice and is a member of the Sydney Criminal Lawyers® content team. Sonia is the winner of the Mondaq Thought Leadership Awards, Spring 2022.

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