Solicitors:
Watsons - Appellant
Commonwealth Director of Public Prosecutions - Respondent Crown
File Number(s): 2012/301096
Decision under appeal Court or tribunal: District Court of NSW
Jurisdiction: Criminal
Date of Decision: 8 December 2015
Before: Norrish QC DCJ
File Number(s): 2012/301096
[2]
Judgment
HOEBEN CJ at CL:
Offence and Crown case
The appellant was charged with the offence of dealing with money intending that it would become an instrument of crime, contrary to s 400.3(1)(b)(ii) of the Criminal Code (Cth) (the "Code"). The indictment was in the following terms:
"Benny Zhong Cheng between about 27 May 2012 and 17 July 2012 at Sydney in the State of New South Wales, did deal with money or other property intending that the money or other property will become an instrument of crime, and at the time of the dealing the value of the money or other property was $1,000,000 or more.
Contrary to section 400.3(1)(b)(ii) of the Criminal Code (Cth)."
The appellant's trial took place before Norrish QC DCJ and a jury between 2 December and 9 December 2015. The appellant was sentenced by his Honour to imprisonment for 2 years and 9 months, commencing 18 March 2016 and expiring 17 December 2018, to be released after serving 15 months upon entering into a recognizance on 17 June 2017 pursuant to the Crimes Act 1914 (Cth) s 20(1)(b) self in the sum of $500 to be of good behaviour for 3 years.
The appellant has appealed against his conviction on the following ground:
The verdict was not open at law in that the jury could never find that:
(a) At the time of dealing with the subject money the appellant intended that it "will become" an instrument of crime; or
(b) That the subject money was "used" in the commission of an offence.
The factual basis for the prosecution case at trial was either agreed or uncontested. It was set out in a statement of "Agreed Facts" (Exhibit A), supplemented by some oral evidence from investigators and an employee of a registered money remitter and reporting entity as defined in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML Act).
The Crown case was that between 27 May 2012 and 17 July 2012 the appellant conducted 11 transactions which resulted in a total of AU$1,098,066 in cash being converted into Chinese currency and transferred to bank accounts held in China. Each of the 11 transactions was outlined in the Agreed Facts and followed a similar pattern. It is, therefore, sufficient to only recite the first transaction as an example of the [appellant's] conduct.
The facts of that transaction were that on Monday 28 May 2012 the appellant entered Sun Capital Pty Ltd, a registered money remitter and reporting entity as defined in the AML Act. The appellant spoke to a staff member enquiring as to the exchange rate before stating that he wished to remit AU$100,000 cash to an account in China. He was requested to produce identification, at which time he produced a NSW drivers licence in the name of Nick Wang, date of birth 2 September 1965, address 20/108-110 Kiora Road, Miranda NSW, licence number 13230589 and bearing his image. He also supplied a mobile telephone number. The staff member satisfied himself that the appellant was the person in the photograph. The staff member then at the appellant's request, converted the AU$100,000.00 cash into 626,000 Ren Min Bi (RMB) and remitted it into an account which was held in China. The appellant signed an invoice completing the transaction. The name and identity documents were false.
The appellant repeated this conduct on 10 further occasions, attending various registered money remitters, and on each occasion using the same false name and producing the same false identity documents.
The appellant made an unsuccessful application at the close of the Crown case of no case to answer. The appellant did not give evidence. His counsel in closing did not contest any facts and did not advance any argument as to the appellant's guilt.
Relevant legislation
Section 400.3 of the Code relevantly provides:
"(1) A person is guilty of an offence if:
(a) the person deals with money or other property; and
(b) …
(i) ...
(ii) the person intends that the money or property will become an instrument of crime; and
(c) at the time of the dealing, the value of the money and other property is
$1,000,000 or more.
"Deals with money or other property" is defined at s 400.2 and relevantly provides:
"(a) receives, possesses, conceals or disposes of money or other property; …"
"Instrument of crime" is defined at s 400.1 and relevantly provides:
"money or other property is an instrument of crime if it is used in the commission of, or used to facilitate the commission of, an offence against the a law of the Commonwealth … that may be dealt with as an indictable offence (even if it may, in some circumstances, be dealt with as a summary offence)."
The Code specifies that s 400.2A has application to cases relating to "possible instruments of crime" and therefore has application to this matter.
Section 400.12 of the Code provides that:
"(1) A single charge of an offence against a provision of this Division may be about 2 or more instances of the defendant engaging in conduct (at the same time or different times) that constitutes an offence against a provision of this Division.
(2) If:
(a) a single charge is about 2 or more such instances; and
(b) the value of the money and other property dealt with is an element of the offence in question;
that value is taken to be the sum of the values of the money and other property dealt with in respect of each of those instances."
The offence identified in order to satisfy the requirement of s 400.3(1)(b)(ii)) was s 140 of the AML Act. Section 140 relevantly provided:
"(1) A person commits an offence if:
(a) the person commences to receive a designated service; and
(b) the person does so using a false customer name; and
(c) at least one provision of Division 2, 3 or 4 of Part 2 applies to the provision of the designated service."
This is a Commonwealth indictable offence.
Section 6 of the AML Act sets out the activities which constitute a "designated service" (as to 1 (a) above) for the purposes of the AML Act. Item 31 of s 6 relevantly provides:
"[Provision of a designated service -] in the capacity of a non-financier carrying on a business of giving effect to remittance arrangements, accepting an instruction from a transferor entity for the transfer of money or property under a designated remittance arrangement.
[Customer of designated service -] the transferor entity."
A "designated remittance arrangement" is defined in s 10(1) of the AML Act. A "remittance arrangement" is defined by s 10(2) of the AML Act. "Transferor entity" is defined by s 10(3)(a) of the AML Act. Section 5 of the AML Act contains the definitions of "commence to provide a designated service" and "receives a designated service".
The appellant's submissions
The appellant does not challenge the correctness of the directions given to the jury as to the elements of the offence (and associated terms) or his Honour's directions as to the application of them to the evidence. Rather, the challenge is solely whether the evidence is capable of satisfying the offence provision.
The appellant's argument, rests on two propositions:
1. that there is no temporal separation between the alleged dealing (in this case, the possessing of money) and the intended use of the money (in this case, the remittal of that money overseas using the money remitter) and
2. that there is no instrumental connection between the money and the commission of the s 140 offence.
In relation to the first argument, the appellant submitted that the Crown had failed to establish that the money "will become" an instrument of crime in that it failed to establish the required "temporal separation" required under s 400.3(1)(b). In support of that proposition, the appellant relied upon the observation of the court (French CJ, Hayne, Bell, Gageler and Keane JJ) in Milne v The Queen [2014] HCA 4; 252 CLR 149 at [33]:
"Instrument of crime - the constructional question
33 For property to become an instrument of crime within the meaning of s 400.3(1) it must be 'used'. An ordinary meaning of the verb 'use' is '[t]o make use of (some immaterial thing) as a means or instrument; to employ for a certain end or purpose.' That is the relevant ordinary meaning for the definition of 'become an instrument of crime' which involves the 'use' of property to serve a purpose, namely the 'commission of an offence' or 'to facilitate the commission of an offence'. The relevant ordinary meaning of 'facilitate' in this case is '[t]o render easier the performance of (an action), the attainment of (a result); to afford facilities for, promote, help forward (an action or process)'.
…
37 The definition of 'instrument of crime' and the deployment of that term in s 400.3(1)(b)(ii) require a temporal separation between the requisite dealing and the intended use of the property. …"
In relation to the "temporal separation issue", the appellant also relied upon the decision of Chen v Director of Public Prosecutions (Cth) [2011] NSWCCA 205; 83 NSWLR 224. In that case the appellant had been found guilty of an offence under s 400.5(1), being that he "dealt with money that he intended would become an instrument of crime and at the time of the dealing the value of the money or property was $50,000 or more". The relevant further intended offence was action which was contrary to s 31 of the Financial Transaction Reports Act 1988 (Cth) which section prohibited the conducting of transactions so as to avoid the applicable reporting requirement. The Crown therein asserted that there were 150 money transactions transferring a total of over $1 million overseas, 142 transactions of which involved amounts less than AU$10,000.
On this issue, Basten JA held that the money the subject of any particular transaction could not properly be described as proceeds of crime committed in the past. His Honour said:
"18 Where the dealing is a single act, that is no doubt so; where there is a series of acts charged as a single offence the temporal dichotomy becomes difficult to identify. For example, in the present case, the first transaction relied upon, being for an amount of less than $10,000, would not have constituted an offence against s 31 of the FTR Act, because it involved only one non-reportable cash transaction. At that stage, it may have been appropriate to say that the applicant intended the money to become an instrument of crime, at some point in the future. However, there would not have been a contravention of s 400.5 of the Code at that stage because the dealing did not involve $50,000 or more. On the other hand, where a single charge is laid in respect of a number of instances of conduct, engaged in at different times, the value of the money is to be calculated, pursuant to s 400.12, at the time of the last transaction: before that, the sum of the values of the money cannot be known. Yet at no time was the money the subject of any particular transaction properly describable as proceeds of a crime committed in the past, because the crime had not been committed until that transaction was complete.
…
20 As the case was opened to the jury (as set out above) it would seem that, had the prosecution been required to particularise the acts constituting the dealing with money for the purposes of s 400.5 and the relevant transactions, for the purposes of s 31 of the FTR Act, the conduct would in each case have been the same. However, s 400.5 does not contemplate that the dealing with money, being the primary physical element of that offence, can itself be the physical element of the 'second tier of inchoate crime', to use the language of Simpson J in Ansari (at [24]). Referring to the offence under s 400.3 as a 'money laundering offence', she noted that the 'money laundering offence is, for relevant purposes, committed where a second crime is in contemplation'. That case involved a conspiracy to commit a criminal act, her Honour explaining in that context that:
"... where the criminal act alleged to be the subject of the agreement is money laundering, the Crown must also prove that the person accused has in contemplation a second crime. That is because money laundering is, by definition, committed where another crime is envisaged - and is not committed unless some other crime is in contemplation (or has been committed)".
21 That analysis cannot apply where the money laundering offence and the second tier inchoate crime are one and the same. Despite s 400.12, it is not possible to read the operative provision, in this case s 400.5, as being engaged where there is only one physical element. The fact that the same physical element may give rise to separate crimes does not overcome the problem that s 400.5 requires contemplation of a future crime involving the same money.
…
23 The consequence of this reading of the section is that, as a matter of law, and accepting as proved all the facts relied upon by the prosecution, no offence was committed under s 400.5 in respect of any future offence, if the latter offence were identified by reference to the operation of s 31 of the FTR Act on the same transactions."
Observations to similar effect were made by Garling J as follows:
"86 The attempt by the Director to use acts which constituted the less serious but completed crime of structuring, to prove the necessary elements of the more serious crime of money laundering failed to grapple with the plain meaning of s 400.5 of the Criminal Code, in particular, the future tense expressed in the words '... intends that the money or property will become an instrument of crime'.
87 All that the Director proved in this case was that '... the money or other property...' was or had become an instrument of crime, not that it would become an instrument of crime at some time in the future.
88 There was no basis in the structuring offence as it was particularised in the trial here, which was capable of proving the more serious money laundering offence."
By reference to those authorities, the appellant submitted that in this case it was the very same physical act relied upon for each transaction, i.e. the presentation of money in the appellant's possession for transfer overseas, which was said to make out both offences. The appellant submitted that in that scenario the possession of money, in the course of the transfer process, notionally constituted the "dealing" and simultaneously constituted the "receiving" of a designated service. The appellant submitted that physical possession of money alone at some earlier point in time without more could not make out the offence under s 400.3(1)(b)(ii). The appellant submitted that even physical possession of the money as at the place of remittal immediately before engagement in the offending pursuant to s 140, without more, could not make out the charge. The appellant submitted that what moneys were possessed by him throughout this period and which of those moneys (or part thereof) were intended to be transferred overseas (in circumstances said to be a breach of s 140) could never be known beyond reasonable doubt, until the time at which such moneys were presented for transfer overseas using the false identification account.
Consideration
The appellant's submission is based on the misconception as to the evidence, the nature of the Crown case as particularised, and the statements of principle in Chen v Director of Public Prosecutions (Cth) and Milne v The Queen.
The elements of the offence contrary to s 400.3(1)(b)(ii), applied to the evidence as particularised are:
1. The appellant possesses money - physical element: conduct (the charge says "deals with" and the definition of "deals" includes possesses); fault element: intending that the money or property will become an instrument of crime (s 400.3(1)(b)(ii));
2. At the time of the dealing (possession) the value of the money and other property is $1,000,000 or more - physical element: circumstance; fault element: absolute liability (s 400.3(4));
3. The money or property could become an instrument of crime in relation to a Commonwealth indictable offence - physical element: circumstance (s 400.2A (3)); fault element: absolute liability (s 400.2A(5)).
Because s 400.3(1)(b)(ii) refers to "intending", an offence can be committed if a person deals with money or property intending that at some time in the future, the property will become an instrument of crime.
Because the Crown alleged an offence contrary to s 403(1)(b)(ii) of the Code it was necessary to nominate an intended offence which it is alleged gave rise to the charge. Section 400.13 of the Code permitted the Crown to identify an indictable offence in the commission of which, or the facilitation of the commission of which, the money was to be an instrument of the offence.
The Crown particularised the intended offence in these terms: that the appellant possessed money intending that it would be used in the commission of offences contrary to s 140 of the AML Act, namely the receipt of a designated service (the remitting of money) on a number of occasions using a false customer name or details and that the total amount involved more than $1 million.
The appellant's argument misunderstands the way in which this offence is particularised, as compared to such cases as Chen v Director of Public Prosecutions (Cth) and Milne v The Queen.
Contrary to the appellant's submission, it is sufficient for temporal separation for the Crown to rely upon possession of the money (the first physical element) immediately before the engagement in the offending pursuant to s 140 of the AML Act. Chen does not say otherwise. It follows that the decision of this Court in Chen supports the conclusion that a structuring offence, not dissimilar to that under consideration in this case, can be used as the indictable (future) offence upon which a charge under Division 400 can be based. The question of whether a structuring offence can be a basis for a Division 400 charge and whether there is sufficient temporal separation will depend on the way in which the charge is particularised.
In Chen Basten JA (with whom Garling J agreed, Simpson J in dissent) allowed the appeal against a conviction for dealing with money intended to become an instrument of crime contrary to s 400.5 of the Code. The offence there was particularised as being committed by the offender having remitted money overseas on 13 occasions in amounts less than $10,000, contrary to s 31 of the Financial Transactions Act. In other words, the remission of money constituted both the "deal with money" component of the offence, as well as the intention that it be used as an "instrument of crime" component of the offence.
The majority considered that s 400.5 required contemplation of a future crime with the relevant money, such that the offence could not be carried out if there were only one physical element. It follows from that approach that the same act cannot establish both dealing with money and that it was an instrument of crime. It also follows from the reasoning of the majority in Chen (and also that of Simpson J on this point) that a structuring offence can be relied upon as an instrument offence, depending on the particularisation of the charge. It is clear from the reasoning of Basten JA and Garling J that the manner in which the offence was particularised was critical to their decision. As it was particularised in Chen, there was no temporal separation between dealing with money and the future crime in contemplation, nor was there any separation of the physical component constituting the dealing with money from the anticipated physical component constituting the future offence.
In the present case the charge is particularised in a different way to that in Chen. As particularised in this case, the dealing with money is constituted by the possessing of money, which is temporally separated from the intended use of the money.
Milne v The Queen which considered s 400.3(1)(b)(ii) is consistent with the decision in Chen insofar as there is a need for there to be a temporal separation between the dealing with the money (i.e. its possession) and the intended use of the money. The necessary intent (this being a crime of intention) was capable of inference beyond reasonable doubt from the actions ultimately carried out by the appellant, i.e. using a remitting agency to transfer the money, contrary to s 140 of the AML Act.
As indicated, the second limb of the appellant's challenge to the conviction was that there was no relevant "use" of the money in the commission of the further intended offences. In other words, there was no instrumental connection between the use of the money and the commission of the further intended offences.
The appellant submitted that because an offence can be committed under s 140 of the AML Act without presentation of the actual money in terms of needing to commence to receive a designated service using a false customer name, it could not be said that the money was in any way "used" as an instrument of crime in the sense required under s 400.3(1)(b)(ii) in the commission of any second tier inchoate crime.
On that issue, the appellant relied upon the discussion of "instrumental connection" by the Court in Milne v The Queen where they said:
"37 … They also require an instrumental connection between the intended use of property and the commission or facilitation of the commission of an offence. Conduct involving property which is no more than a necessary condition of the commission of a subsequent offence does not on that account amount to the use of the property in or to facilitate the commission of that offence. Nor is the instrumental connection demonstrated merely by an intention to take advantage of circumstances arising after and as a result of the requisite dealing. A fortiori, that is the case where that property has been put beyond the reach of the accused by sale to a third party."
The appellant submitted that if the s 140 offence was committed without "use" of the money then that scenario fails to make out the requisite elements of s 400.3(1)(b)(ii). On that scenario the money would effectively be uninvolved with the commission of the s 140 offence. The appellant submitted that in those circumstances, the Crown's counter-argument would be, at its highest, that the money was characterised as having some type of practical "but for" effect which was still a characterisation falling short of being a "necessary condition" and falling well short of the characterisation of "instrumental connection" in the commission of the intended offence.
The appellant submitted that evidence of prior possession of the money alone could never make out the requisite intention under s 400.3(1)(b)(ii). And when the transactions in breach of s 140 were said to have commenced, either the money was presented to the remitter, which meant that there was no "temporal separation" as required under s 400.3(1)(b)(ii); or, the money was not presented, in which event, it was not "used' in the Milne sense in that it was not "instrumentally connected" with the commission of any s 140 offence.
The appellant submitted that if that reasoning was accepted, the Crown case, as it was left to the jury, involved an offence which was unavailable at law and as such, the conviction should be set aside.
Consideration
In Milne v The Queen the offender (Mr Milne) who was the sole director/shareholder of Barat Advisory Pty Ltd (Barat) arranged to dispose of shares owned by Barat in another company, Admerex Ltd, (the Admerex shares), by way of a share swap with another company. In doing so, he intended that Barat would not declare the capital gain derived from the transaction to the Australian Taxation Office (which would amount to an offence against the Code). In November 2006, Mr Milne caused an income tax return to be lodged for Barat that did not declare the capital gain derived from the transaction.
As in the present case, Mr Milne was charged with an offence under s 400.3(1) of the Code. The prosecution particularised the case as follows: that Mr Milne "used" the Admerex shares by effecting the transaction intending that they be used as an "instrument of crime" in that the disposition of the shares would be used to conceal the capital gain arising from the transaction. The Court accepted that argument and the jury convicted Mr Milne.
The High Court allowed the appeal on the basis that the Admerex shares were not intended to become an "instrument of crime". The High Court found that s 400.3(1) required that there be dealing with the property and intended future use of the property. The Court considered the terms "use" and "facilitate" in the definition provision should be given their ordinary meaning but, as discussed above, found at paragraph [37] that the definition of "instrument of crime" required a temporal separation between the requisite dealing and the intended use of the property and that property be more than merely a necessary condition of the commission of a subsequent offence.
On the Crown case as particularised in Milne v The Queen, the disposal of the Admerex shares could not have been "used" with the intention that they become an "instrument of crime" because the shares were transferred to a third party such that no future use could be made of them by Mr Milne. While the swapping of the shares facilitated the later fraud in a remote sense, they were no more than a necessary component of the fraud (i.e. being required to obtain capital gains) rather than having an "instrumental connection" with the fraud (i.e. the intentional failure to declare the capital gains). The shares themselves had no role to play in the failure to declare the profits resulting from their sale.
As can be seen, the facts in Milne v The Queen were quite different from the case as particularised here. In this case there is the necessary temporal separation. There is also the necessary instrumental connection referred to in Milne. The appellant conceded the possession of the money, going to the money remitters and remitting the money with the use of a false name. Further, the temporal separation required by the High Court in Milne v The Queen at [37], was also not challenged at trial.
Indeed the trial judge in refusing the no case application concluded:
"Given the character of each transaction there is both the 'temporal separation' (which has not been seriously challenged) and the 'instrumental connection' which are required as a matter of law to constitute the offence." (AB 285)
Moreover, an analysis of the nature of s 140 of the AML Act shows that money (in the appellant's possession) was instrumental in the commission of the offence, (in other words "had an instrumental connection") or facilitated the commission of the offence. You cannot receive a "designated service" without seeking to transfer money, or seek a "designated service" for the transfer of the money, without having money available to transfer. The designated service is not complete without the handing over of the money because the purpose of the designated service is to transfer money.
It matters not that an offence under s 140 of the AML Act can be committed without the money being transferred. The money was in fact transferred in this case and the appellant's intention was established, keeping in mind that the offence is one of intention and is complete when the requisite intention is established. Because the offence in s 400.3(1)(b)(ii) focuses on the appellant's intention, it is not necessary to consider (nor satisfy) the elements of the s 140 offence for the purpose of determining whether the money could be said to have been intended to become "an instrument of crime".
As a matter of practicality, the identified businesses were reporting services and registered money remitters. As such they were required to carry out a "customer identification procedure" at the commencement of the provision of the designated service, i.e. the remittance of money, in order for the appellant to commence to receive a relevant designated service in respect of each incident. A reporting entity was not to provide a designated service unless certain criteria were satisfied. The reporting entity needed to be satisfied on each occasion that a designated service was to be provided, that those criteria had been complied with.
It follows that on the first occasion that the appellant remitted money, the money remitter could not commence to provide the designated service until the money remitter carried out the applicable customer identification procedure in regard to the appellant. However, on each subsequent occasion that the appellant remitted funds with the same money remitter, the money remitter still had to comply with that procedure. The money remitter could not remit the funds unless all the conditions were satisfied.
The offence is about receiving a service. The use of the service is for a particular purpose. It is clear that the use of money or the transfer of money is instrumental for the commission of an offence or it facilitates the commission of an offence under s 140 of the AML Act. The money was integral to the commission of the crime. The purpose of receiving a designated service was to transfer the money in the appellant's possession. On that basis "money" was an instrument of crime as envisaged by ss 400.1 and 400.2A of the Code.
The Crown case was that the appellant intended to receive a "designated service" for the purposes of s 140 of the AML Act each time he conducted a transfer and money was instrumental to that process. He did so on each occasion intentionally using a false name. Not surprisingly, it is not suggested by the appellant that the elements of this offence were not capable of being satisfied.
In any event, satisfaction of the elements of the s 140 offence was an unnecessary condition as s 400.3(1)(b)(ii) is directed to the appellant's intention and establishing that intention is sufficient to deal with his argument. Over a period between 27 May 2012 and 17 July 2012, the appellant conducted 11 transactions which resulted in a total of AU$1,098,066 in cash being converted into Chinese currency and transferred to bank accounts held in China. In each of those transactions, he provided the money remitter with a false customer name. It follows that on each of the 11 occasions that the appellant attended the money remitter, he intended to remit funds overseas in a false name using that money remitter. In other words, he was intending to commit an offence and intending that the money in his possession would become an instrument of the offence so that each time the transaction gave rise to a separate offence against s 140(1) of the AML Act.
On the basis of the above analysis, the ground of appeal relied on by the appellant has not been made out and the appeal should be dismissed.
WALTON J: I agree with the orders proposed by Hoeben CJ at CL for the reasons given by his Honour.
PRICE J: I agree with Hoeben CJ at CL.
[3]
Amendments
07 April 2017 - added representation to coversheet - system import issue
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Decision last updated: 07 April 2017