Commissioner of the Australian Federal Police v Minh Duc Pham

Legislative provisions

1. Section 49 of the Act provides as follows: 49 Forfeiture orders - property suspected of being proceeds of indictable offences etc. (1) A court with *proceeds jurisdiction must make an order that property specified in the order is forfeited to the Commonwealth if: (a) the *responsible authority for a *restraining order under section 19 that covers the property applies for an order under this subsection; and (b) the restraining order has been in force for at least 6 months; and (c) the court is satisfied that one or more of the following applies: (i) the property is *proceeds of one or more *indictable offences; (ii) the property is proceeds of one or more *foreign indictable offences; (iii) the property is proceeds of one or more *indictable offences of Commonwealth concern; (iv) the property is an instrument of one or more *serious offences; and (e) the court is satisfied that the authority has taken reasonable steps to identify and notify persons with an *interest in the property. (2) A finding of the court for the purposes of paragraph (1)(c): (a) need not be based on a finding that a particular person committed any offence; and (b) need not be based on a finding as to the commission of a particular offence, and can be based on a finding that some offence or other of a kind referred to in paragraph (1)(c) was committed. (3) Paragraph (1)(c) does not apply if the court is satisfied that: (a) no application has been made under Division 3 of Part 2‑1 for the property to be excluded from the *restraining order; or (b) any such application that has been made has been withdrawn. Refusal to make a forfeiture order (4) Despite subsection (1), the court may refuse to make an order under that subsection relating to property that the court is satisfied: (a) is an *instrument of a *serious offence other than a *terrorism offence; and (b) is not *proceeds of an offence; if the court is satisfied that it is not in the public interest to make the order."
2. It can be seen that s 49(1) imposes an obligation on the Court to make a forfeiture order in the event that the four conditions in s 49(1) are satisfied. The only relaxation of that obligation is to be found in s 49(4) and that provision is only engaged, inter alia, in circumstances where the relevant property is not the "proceeds of an offence". In this case it is clear that the condition in s 49(1)(a) has been satisfied in that a relevant responsible authority for a restraining order has applied for the order. Further, the criterion in s 49(1)(b) has also been satisfied, in that restraining orders were made on 31 January 2013. Further, the criteria in s 49(1)(e) have clearly been satisfied as well. As I will explain, the only persons with a relevant interest in the property the subject of the application are the three defendants and they have been clearly given more than reasonable notice of the making of the application.
3. The criteria that needs more detailed consideration is that specified in s 49(1)(c). The Commissioner's primary contention is that the relevant property is the proceeds of one or more indictable offences (s 49(1)(c)(i)), although, in the alternative, it is submitted that the property is an "instrument of one or more serious offences" (s 49(1)(c)(iv)). To explain this contention it is first necessary to outline some provisions of the Act in more detail as well as identify the relevant indictable offences that the property is said to be the proceeds of.
4. The concept of the proceeds of an offence is defined in s 329(1) of the Act which provides: "329 Meaning of proceeds and instrument (1) Property is proceeds of an offence if: (a) it is wholly derived or realised, whether directly or indirectly, from the commission of the offence; or (b) it is partly derived or realised, whether directly or indirectly, from the commission of the offence; whether the property is situated within or outside *Australia."
5. It can be seen that this provision uses the term "derived". That phrase is given an expanded meaning by s 336 of the Act as follows: "336 Meaning of derived A reference to a person having derived *proceeds, a *benefit, *literary proceeds or *wealth includes a reference to: (a) the person; or (b) another person at the request or direction of the first person; having derived the proceeds, benefit, literary proceeds or wealth directly or indirectly."
6. The concept of an "instrument of an offence" is defined in s 329(2) of the Act which provides: "(2) Property is an instrument of an offence if: (a) the property is used in, or in connection with, the commission of an offence; or (b) the property is intended to be used in, or in connection with, the commission of an offence; whether the property is situated within or outside *Australia."
7. Property is defined in s 338 to mean "real or personal property of every description, whether situated in Australia or elsewhere and whether tangible or intangible, and includes an interest in any such real or personal property". The reference to "intangible property" is of some significance to this case in that it includes a chose in action. Otherwise it should be noted that property can be the proceeds of an offence or an instrument of an offence even if no person has been convicted of an offence (under s 329(3)).
8. The relevant offences that have been identified by the Commissioner as justifying the application are said to had been committed under s 142 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 ("AMLCTFA") which provides: "142 Conducting transactions so as to avoid reporting requirements relating to threshold transactions (1) A person (the first person) commits an offence if: (a) the first person is, or causes another person to become, a party to 2 or more non‑reportable transactions; and (b) having regard to: (i) the manner and form in which the transactions were conducted, including the matters to which subsection (3) applies; and (ii) any explanation made by the first person as to the manner or form in which the transactions were conducted; it would be reasonable to conclude that the first person conducted, or caused the transactions to be conducted, in that manner or form for the sole or dominant purpose of ensuring, or attempting to ensure, that the money or property involved in the transactions was transferred in a manner and form that would not give rise to a threshold transaction that would have been required to have been reported under section 43. Penalty: Imprisonment for 5 years or 300 penalty units, or both. (2) Subsection (1) does not apply if the defendant proves that the first person did not conduct the transactions, or cause the transactions to be conducted, as the case may be, for the sole or dominant purpose of ensuring, or attempting to ensure, that the money or property involved in the transactions was transferred in a manner and form that would not give rise to a threshold transaction that would have been required to have been reported under section 43. Note: A defendant bears a legal burden in relation to the matters in subsection (2) - see section 13.4 of the Criminal Code. (3) This subsection applies to the following matters: (a) the value of the money or property involved in each transaction; (b) the total value of the transactions; (c) the period of time over which the transactions took place; (d) the interval of time between any of the transactions; (e) the locations at which the transactions took place."
9. The concepts used in this section need some further explanation. The phrase "non-reportable transaction" in s 142(1)(a) is defined in s 5 of the AMLCTFA as follows: "If: (a) a reporting entity commences to provide, or provides, a designated service to a customer; and (b) the provision of the service involves a transaction; and (c) the transaction is not a threshold transaction; the transaction is a non-reportable transaction."
10. The concept of a "reporting entity" is defined in s 5 to mean a person who provides a designated service and those services are defined in s 6. They include the provision of a bank account and allowing a transaction to be conducted in relation to a bank account. If it is not otherwise obvious, clearly one category of reporting entity is a trading bank.
11. A "threshold transaction" is defined in s 5 of the AMLCTFA as follows: "threshold transaction means: (a) a transaction involving the transfer of physical currency, where the total amount of physical currency transferred is not less than $10,000; or (b) a transaction involving the transfer of money in the form of e‑currency, where the total amount of e‑currency transferred is not less than $10,000; or (c) if: (i) the regulations provide that this definition applies to a specified transaction involving money; and (ii) the regulations provide that a specified amount is the transaction threshold for the specified transaction; the specified transaction, where the total amount transferred is not less than the transaction threshold for the transaction; or (d) if: (i) the regulations provide that this definition applies to a specified transaction involving the transfer of property; and (ii) the regulations provide that a specified amount is the transaction threshold for the specified transaction; the specified transaction, where the total value transferred is not less than the transaction threshold for the transaction. Paragraphs (a) and (b) do not limit paragraph (c)."
12. The concept of a "non-reportable transaction" can be best understood by considering the obligation imposed by s 43 to report threshold transactions. Section 43 provides: "43 Reports of threshold transactions Scope (1) This section applies to a reporting entity if: (a) the reporting entity commences to provide, or provides, a designated service to a customer; and (b) the provision of the service involves a threshold transaction. Report (2) The reporting entity must, within 10 business days after the day on which the transaction takes place, give the AUSTRAC CEO a report of the transaction. (3) A report under subsection (2) must: (a) be in the approved form; and (b) contain such information relating to the transaction as is specified in the AML/CTF Rules. Note 1: For additional rules about reports, see section 244. Note 2: Section 49 deals with the provision of further information, and the production of documents, by the reporting entity. Civil penalty (4) Subsection (2) is a civil penalty provision."
13. I will shortly outline the factual material which is said to support the Court being satisfied of the matter set out in s 49(1)(c) of the Act. However, for present purposes, that material can be accepted as demonstrating to the relevant standard that a person or persons engaged in a deliberate process of depositing set amounts of cash into bank accounts associated with the three defendants under the threshold amount of $10,000. As such, that person or persons caused "another person", being the relevant bank, to become a party to two or more non-reportable transactions, being the transactions effected in depositing those amounts (AMLCTFA, s 142(1)(a).
14. Further, for the reasons that will become apparent, it is clear from the manner in which the transactions were conducted, and having regard to the available explanations concerning those transactions, that it would be reasonable to conclude that whoever "conducted, or caused those transactions to be conducted, … [did so] for the sole or dominant purpose of ensuring, or attempting to ensure, that the money or property involved in the transactions was transferred in a manner and form that would not give rise to a threshold transaction that would have been required to have been reported under s 43" (AMLCTFA, S 142(1)(b)).
15. I will return to consider the balance of s 142 shortly. What is important to note is the gravamen of the offending is the actions of those persons who engaged in or caused the deposits to happen because they caused the relevant bank to become a party to two or more non-reportable transactions.

The contraventions

1. I turn to the factual material relied upon by the Commissioner. Placed before the Court was material concerning various bank accounts associated with the defendants, including the three which I referred to earlier.
2. In relation to the Pham account, that being the account referred to in schedule 1, the bank statement from the CBA for that account indicates that between 23 November 2012 and 3 December 2012 there were approximately forty cash deposits into that account. The cash deposits were all less than $10,000. The cash deposits were all in well-rounded sums, with the most common amount being deposited being $9,000 and the next most common amount being $8,000. The deposits were made at various branches of the CBA across Sydney, including but not restricted to Kingsgrove, Burwood, Pagewood, Cabramatta, Matraville, Lidcombe, Summer Hill, Chester Hill, Ashfield and Fairfield. On their face, those deposits appear to reveal coordinated action designed to increase the balance of the Pham accounts but not engage the reporting obligation in s 43 of the AMLCTFA.
3. In relation to the Quang account, that being the account in the third schedule, the material from the CBA indicates that between 16 July 2012 and 23 November 2012 three large deposits totalling approximately $750,000 were made into that account. Further, the CBA's records indicate that the source of those three large deposits was an account in the name of the third defendant at the CBA. The CBA records for that account indicate that between 6 July 2012 and 23 November 2012 there were well in excess of fifty cash deposits into that account all displaying the same characteristics as I have identified with the Pham account, other than the anomaly that on one occasion there appears to have been a cash deposit of $16,000.
4. In relation to the joint account, the evidence from the ANZ Bank indicates that on or about 7 June 2012 the sum of $453,000 was transferred into that account. The material indicates that the source of the funds for that deposit was another joint account in the name of the second and third defendants opened with the ANZ. The ANZ records indicate that between 29 May and 6 June, that account received numerous cash deposits in round sums which, with one exception, were all just under the reportable threshold of $10,000. The records from the ANZ did not indicate what branches those deposits emanated from.
5. There is material that indicates the position of the defendants in relation to these transactions, including the letter which I referred to earlier, as well as a conversation between the first defendant and a federal agent in December 2012, as well as the transcript of their compulsory examinations conducted under the Act. As best as can be ascertained, it appears to be their contention that these moneys were all originally lawfully earned by the third defendant in Vietnam and that he arranged to transfer them to Australia via some form of gold or cash merchant operating out of Vietnam. Although it is not particularly clear, it seems to be their position that it was that agent or merchant who arranged for the structured depositing that resulted in the balances in the various bank accounts.
6. One potential difficulty with this explanation for the defendants is that the Commissioner has obtained an expert on Vietnamese law who outlines the legislative regime concerning the control of currency exports from Vietnam. Apparently, the stated purpose of the third defendant in seeking to remit the funds to Australia was to purchase real estate. The relevant expert in Vietnamese law indicates that that purpose is one which is not permitted under Vietnamese law unless otherwise approved by the State Bank of Vietnam.
7. However, the biggest difficulty for the defendants at this point is that all that their explanations demonstrate is that they may not have contravened s 142(1) of the AMLCTFA because they were not the person that caused the reporting entity to become a party to two or more non-reportable transactions. However their explanation suggests that, instead, it was the merchant or agent who breached that provision. For the purposes of determining whether s 49(1)(c)(i) or s 49(1)(c)(iv) of the Act is satisfied that distinction is irrelevant.
8. Accordingly, I am satisfied that the material demonstrates that the structured form of deposits into the accounts that I have indicated involves a contravention of s 142(1) of the AMLCTFA. In that regard there is simply no material that would engage s 142(2).

Proceeds of crime

1. The question then arises as to whether the Court is satisfied that the property is either the proceeds of one or more indictable offence, or the property is an instrument of one or more serious offences.
2. I have set out the provisions dealing with the meaning of "proceeds of one or more indictable offences" earlier.
3. There is debate in the authorities concerning whether if money is lawfully derived and is deposited into an account opened in a false name that results in the proceeds of the bank account becoming the proceeds of an offence (see Studman v Director of the Public Prosecutions (Cth) [2007] NSWCA 285, "Studman"; and Re Commissioner of the Australian Federal Police [2012] NSWSC 1533). Consistent with his duties to the Court, Mr Moses SC has drawn the Court's attention to those decisions and has also referred to Markovski v Director of Public Prosecutions [2014] VSCA 35, especially at [50].
4. There is no doubt that the relevant property that is the subject of this application is of the intangible kind that I referred to earlier; namely, the chose in action represented by the rights that each of the three defendants have against the CBA and the ANZ concerning the amounts standing to their credit in those bank accounts (Studman at [41]). The question raised by this matter is whether those rights are the proceeds of a contravention of s 142(1) of the AMLCTFA.
5. As I stated earlier, the essence of the contravention of s 142(1) was the causing of the banks to become a party to two or more non-reportable "transactions", specifically the deposits of less than $10,000 that occurred in the manner I stated earlier. In my view, when the criminality is understood in those terms it follows that the amount standing in a bank account as a consequence of the giving effect to the non-reportable transactions referred to in s 142(1) is clearly property that is either wholly or partly realised or derived, whether directly or indirectly, from the commission of that offence. The connection between that form of property and the commission of the offence is, in my view, much more direct than the circumstances addressed in Studman. The relevant property is in a very direct way the consequence of those transactions having been engaged in.
6. Accordingly, I am satisfied that the property identified in the schedule is the proceeds of one or more indictable offences for the purposes of s 49(1)(c)(i) of the Act.
7. It further follows that there is no basis for the Court to refuse the order and, specifically, no basis upon which it can consider whether the public interest warrants such an order not being made (at s 49(4)). For the sake of completeness I would note that at least two of the competing considerations in respect of that matter were, firstly, assuming that the defendants' statements are accepted, the potential contravention of the laws of Vietnam that was occasioned on the remittal of the moneys out of Vietnam, and otherwise the hardship pointed to by the third defendant and the other defendants in the material before me, including that stated in the letter that was handed up at the commencement of these proceedings.
8. Accordingly, I will make orders in accordance with the draft short minutes of order that are initialled by me, dated today and placed with the papers.

Amendments 24 September 2015 - Cover sheet amended to show "Common Law - Criminal" as the correct jurisdiction. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 September 2015