Law on Money Laundering via Cryptocurrency

Poppy Morandin.

A man who is alleged to have directed a money laundering criminal syndicate which converted over five million dollars’ worth of Bitcoin into cash, has been arrested and charged by police.

The New South Wales Crime Command’s Cybercrime Squad established Strike Force Curns in order to investigate criminal syndicates involved in cyber-enabled money laundering.

The Strike Force’s detectives arrested, Yi Zhong, a 30-year-old man following a vehicle stop at Homebush Road, Strathfield.

The vehicle search had uncovered two bags containing $1 million cash, which was subsequently seized by detectives.

The same morning, a search warrant was executed on Zhong’s house in Wentworth Point.

Investigators seized over one kilogram of methylamphetamine, cocaine, mobile phones, a laptop, electronic storage devices and cash.

“This is the first phase of arrests and it is anticipated further arrests will be made over the next four weeks as the evidence gathered is collated and assessed,” said Cybercrime Squad Commander Detective Superintendent Matt Craft.

“The message is clear, the fact you deal in cryptocurrency does not place you beyond the reach of the NSW Police Force.” he continued.

Mr Zhong was charged with 24 offences including; 19 counts of knowingly deal with proceeds of crime intent to conceal, knowingly deal with proceeds of crime, knowingly direct activities of criminal group, supply prohibited drug, take part supply prohibited drug (large commercial quantity) and take part supply prohibited drug (commercial quantity).

The man was refused bail and appeared before Burwood Local Court, where he was formally bail refused to appear at Central Local Court on Monday 19 April 2021.

Police will allege the group were operating as money launderers for hire.

Money laundering is the process by with ‘dirty money’, which has come about as a result of a crime, is converted into ‘clean money’ for personal use.

The rise of cryptocurrency has presented challenges for law enforcement, in that the anonymity of bitcoin transactions can often inhibit investigations.

Law on Money Laundering via Cryptocurrency

In NSW, pursuant to section 193B of the Crimes Act 1900 (NSW) it is an offence to deal with the proceeds of crime knowing that it is proceeds of crime and intending to conceal that it is the proceeds of crime.

This offence carries a maximum penalty of 20 years imprisonment.

Alternatively, a person who deals with proceeds of crime knowing that it is proceeds of crime is guilty of an offence, pursuant to section 193B(2) of the Crimes Act 1900 (NSW). This offence carries a maximum penalty of 15 years imprisonment.

A person who deals with proceeds of crime being reckless as to whether it is the proceeds of crime is guilty of an offence, pursuant to section 193(3) of the Crimes Act 1900 (NSW). This offence carries a maximum penalty of 10 years imprisonment.

‘Proceeds of crime’ means any property that is substantially derived or realised, directly or indirectly, by any person from the commission of a serious offence, according to section 193A of the Crimes Act 1900 (NSW).

Commonwealth law also criminalises money laundering, within the Criminal Code Act 1995 (Cth). which is applicable across all Australian states and territories.

The severity of penalties associated with money laundering offences under the Criminal Code Act depend on the amount of money involved.

Pursuant to section 400.3 a person commits an offence if they deal with money or other property and it is either, and the person believes it to be, proceeds of crime or the person intends that the money or property will become an instrument of crime.

If the value of the money or property is $1,000,000 or more, a maximum penalty of 25 years in jail and/or a $333,000 fine is applicable.

In the event that the value is $100,000 or more, a maximum penalty of 20 years in jail and/or $266,400 is applicable, pursuant to section 400.4(c).

If the value of the money and other property is $50,000 or more, then a maximum penalty of 15 years in jail or $199,800 is relevant.

The Code also deals with money laundering offences where the value is $10,000 or more and $1,000 or more. The applicable maximum penalties are imprisonment for 5 years and/or a $66,600 fine and imprisonment for 12 months, and/or a fine of $13,320, respectively.

The Code also criminalises instances in which a person is reckless or negligent to the fact that the money or property is proceeds of crime, or where there is a risk that it will become an instrument of crime.

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