The Law on Money Laundering via Bitcoin

Sahar Adatia and Jimmy Singh.

 

A man from Sydney accused of running a criminal syndicate that laundered money via Bitcoin has been arrested after police allegedly discovered $1million worth of cash inside his car.

About 5:30am on Monday 22 February 2021, cybercrime detectives from Strike Force Curns – which was set up in October last year to investigate the alleged criminal money laundering syndicate – pulled over the 30-year-old man in Strathfield in Sydney’s inner-west.

During the vehicle stop, detectives allegedly discovered two large bags containing $1million in cash.

A subsequent search of a Wentworth Point home then allegedly led investigators to over a kilogram of methylamphetamine, cocaine, a laptop, several mobile phones and electronic storage devices, and more cash.

The items were seized by police and will undergo further examination.

The man was taken to Auburn Police Station where he was charged with a total of 24 offences.

Of these were 19 counts of knowingly dealing with proceeds of crime intent to conceal.

The other charges included knowingly dealing with proceeds of crime, knowingly directing activities of criminal group, supplying prohibited drug, taking part supplying prohibited drug of a large commercial quantity, and taking part supplying prohibited drug (commercial quantity).

The man was denied bail and will face Central Local Court on April 19.

Police will allege the man commanded a syndicate to launder an amount of $5,479,300 by converting cash into bitcoin on his behalf.

 

NSW Police: Criminal Group Operating as “Money Launderers for Hire”

Since the man’s arrest, NSW Police cybercrime squad commander Detective Superintendent Matt Craft has alleged the group was functioning as “money launderers for hire”.

As investigations under Strike Force Curns continue, he also forewarned that additional arrests will be made in the proceeding weeks.

“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,” Detective Superintendent Craft said.

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

 

What is Cryptocurrency?

In simple terms, cryptocurrency is a digital or virtual currency that can be used to buy goods and services.

It is secured by cryptography, the encryption techniques which make it nearly impossible to counterfeit or double-spend.

Cryptocurrencies work using a technology called blockchain.

Blockchain is a decentralised technology spread across many computers that manages and records transactions.

A defining feature of cryptocurrencies is that they tend to not be issued by any central authority.

Thus, theoretically, they are invulnerable to interference from the government or manipulation.

Bitcoin was the first blockchain-based cryptocurrency, which still holds its position as the most popular and most valuable type.

Nevertheless, there are currently thousands of different cryptocurrencies with numerous functions and specifications.

Interestingly, in a research paper titled, “Sex, Drugs, and Bitcoin”, by Professor Talis Putnins from the University of Technology Sydney, PhD student Jonathan Karlsen, as well as a researcher from the University of Sydney, it was found that close to half of all transactions in Bitcoin are associated with buying and selling illegal goods and services.

This was based off findings which tracked illegal Bitcoin use worldwide using data from 2009 to 2017.

Moreover, it was revealed that about one in three bitcoin users is involved in such illegal activity.

“Users involved in illegal activity are very active in terms of buying, selling and trading, whereas legal users are largely buying and holding the cryptocurrency,” Professor Putnins says.

The research also revealed that about one quarter of the total dollar value of transactions in Bitcoin is associated with illegal transactions. 

The Law on Money Laundering Via Bitcoin in NSW

Proceeds of crime refers to any money or property that is gained by a person, whether directly or indirectly, from criminal activity.

In NSW, “property” is understood as real and personal property.

This includes money, valuable securities, debts, and legacies; and all deeds and instruments relating to, or evidencing the title or right to any property, or giving a right to recover or receive any money or goods.

It includes not only property originally in the possession or under the control of any person, but also any property into or for which the same may have been converted or exchanged, and everything acquired by such conversion or exchange, whether immediately or otherwise.

In NSW, section 193C of the Crimes Act 1900 outlines the penalties for dealing with proceeds of crime.

It states that a person who deals with property and there are reasonable grounds to suspect that the property is proceeds of crime which has a value of $100,000 or more can face a maximum penalty of five years in jail.

Where such a proceeds of crime offence takes place but the value of the property is less than $100,000, the maximum penalty a person can face is three years in jail.

The offence of money laundering under section 193B prescribes up to 20-years imprisonment even if it is via bitcoin where a person deals with proceeds of crime, knowing it is and intends to conceal it i.e. to conceal it via bitcoin.

Have a question on money laundering laws? Contact our experienced criminal defence lawyers today.

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