Money Laundering Charges, Defences and the Law

Poppy Morandin.

 

A 51-year-old man has been charged over his alleged involvement in a business email scam targeting an Australian government agency.

Police from the Sydney City Police Area Command received reports after funds totalling $942,700 were allegedly fraudulently obtained from a government agency via an online business email compromise (BEC) scam.

The State Crime Command’s Cybercrime Squad, then took carriage of the investigation.

Their inquiries revealed that an invoice had been submitted for payment along with a request to change bank details before the funds were transferred into a personal account.

Following reports of alleged fraudulent activity at a bank at a shopping centre at Eastgardens, police arrested the man.

He was taken to Maroubra Police Station, where he was charged with recklessly deal with proceeds of crime.

Police will allege in court that the man dealt with proceeds of crime valued at more than $900,000.

The Pagewood man was granted strict conditional bail to appear at the Downing Centre Local Court on 25 August 2021.

Inquiries are continuing with further charges expected to be laid with regard to the scam.

“This arrest serves as a timely reminder, that if you financially benefit through illicit means – including through online activities – you will get caught.

“In addition, those who receive funds from an unknown source into their bank account are warned that they may commit criminal offences if it’s not reported to police,” commented Cybercrime Squad Commander, Detective Superintendent Matthew Craft.

A business email compromise occurs when an individual or business receives a doctored invoice purporting to be from a service or goods provider with fraudulent payment information, leading to the funds being transferred into a scammer’s account.

Concerningly, in most cases, the recipient will pay the invoice as normal and not realise they have been scammed until its too late.

In 2019-20 financial year there were 4,255 reports of BEC scams reported through the ACSC’s ReportCyber tool, representing losses of over $142 million.

Small and micro businesses reported more scams than medium and large-sized businesses.

The average loss was $11,000, but some businesses lost up to $200,000.

Pursuant to section 193B of the Crimes Act 1900 (NSW), a person who deals with proceeds of crime knowing that it is proceeds of crime and intending to conceal that it is the proceeds of crime is guilty of an offence.

It carries a maximum penalty of 20 years imprisonment.

Furthermore, a person who deals with proceeds of crime knowing that it is proceeds of crime is guilty of an offence, pursuant to section 193(2) of the Crimes Act 1900 (NSW).

However, 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.

A defence to money laundering includes if the defendant satisfies the court that they dealt with the proceeds of crime to assist the enforcement of a law of the Commonwealth, a State, or a Territory.

‘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).

Money laundering is also criminalised under Commonwealth law, which is applicable across all Australian states and territories.

Part 10.2 of the Criminal Code Act 1995 (Cth) provides heavy maximum penalties, dependant on the sum money involved – ranging from $1 million or more, $100,000, $50,000, $10,000, $1000 or of any other value that is less.

The Act 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.

Pursuant to sections 400.3 – 400.8 of the Act, the maximum penalties accordingly range from 25 years imprisonment to 6 months.

During sentencing for money laundering offences, a significant consideration will be the role played by the offender where a criminal hierarchy has been discovered, as is often the case in such matters.

Sentences should be higher for offenders who obtain higher rewards and have a lower risk of detection than persons lower in the hierarchy whose criminality is lesser and who run a higher risk of detection: Ihemeje v R [2012] NSWCCA 269 at [63], [87].

Furthermore, the number of transactions and the period over which the transactions occurred are significant as they may be found to indicate the extent of the offender’s criminality: R v Huang (2007) 174 A Crim R 370 at [35].

Generally, a number of transactions involving small amounts of money will be more serious than a single transaction of a larger amount as the latter may be seen as an isolated offence.

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