DPP (Cth) v CHENG

District Court of NSW|2015-12-07

Solicitors: Director of Public Prosecutions (Cth) - Crown Watsons - Accused File Number(s): 2012/301096

Introduction

Benny Zhong Cheng ('the accused') is on trial in relation to one offence against s (or ss) 400.3 Criminal Code Act 1995 (Cth) ('the Code').He was arraigned on Wednesday 2 December 2015 and the prosecution's case formally closed on Friday 4 December. Application has been made by the accused for a verdict of not guilty by direction at the conclusion of the Crown case. The accused submits that on the evidence the Crown cannot establish the guilt of the accused. The prosecution opposes the application. The Court has been favoured with written submissions by both defence and prosecution, supplemented by oral submissions.

The character of the Crown case

The prosecution case is essentially 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 Act 2006.
It is not disputed in the Agreed Facts that the accused on 11 separate occasions between 28 May 2012 and 16 July 2012 the accused approached 3 'money remitters' at Ashfield (Sun Capital), Eastwood and Haymarket (DS Finance - different branches of the same corporation or business). On each occasion he produced a quantity of cash ranging from AU$60,000 to AU$159,800, usually (on 8 occasions) producing the sum of AU$100,000, requesting an employee of the relevant 'remitter' to remit the particular amount to an account in China. On 4 different dates 2 transactions were conducted. A total of AU$1,098,066 was remitted to accounts in China.
On the first occasion he approached each business location he produced a NSW driver licence in the name of 'Nick Wang', with an address in Miranda and a birthdate of 2 September 1965. The licence had the photograph of the accused on it. The accused did not reside at the Miranda address and his birthdate is not 2 September 1965. According to NSW records his date of birth is 5 August 1964. The licence is a 'forgery' or a 'fake'. Its 'customer number' is that of another person altogether living in Wentworthville and no person called Nick Wang exists on Transport Department records with the same birthdate and address as on the licence the accused produced on a number of occasions. The accused on each of these 3 occasions supplied a mobile phone number registered in another person's name.
On 5 out of 6 occasions the accused went to the Ashfield business he was asked to produce a form of identification (the driver licence) and he was compared in appearance with the photo on the licence. On the 6th occasion having recognized the accused from previous transactions 'the employee was satisfied that the accused was the holder of a NSW driver licence in the name of Nick Wang bearing the image of the accused. At Eastwood he produced the licence the first time which was then photocopied. Thereinafter he was compared to the copy of the licence on file the following 2 occasions he attended that location. At Haymarket on the first occasion he produced the licence and it was matched to his physical appearance and the copy of the licence on 'file' (apparently from the Eastwood branch) and on the second occasion the same process was undertaken. On each occasion the relevant business' paperwork was completed, the sum converted to Chinese currency (RMB) for deposit in the Chinese account number supplied by the accused. The accused signed in the name 'Nick Wang' either a 'Remittance Application Form', referred to in the Crown submissions as an 'invoice', (for the Ashfield transactions) or an 'RMB TT Form' or a 'Foreign Exchange Record' record ( sic) at the Eastwood and Haymarket locations.
The respective businesses were "reporting entities" and "registered money remitters" pursuant to relevant legislation referred to later.
The 'Nick Wang' licence was recovered by police from a residence occupied by the accused's ex-wife and his children that the accused regularly attended and where he was arrested on 27 September. His passport was found by police in that residence during a search of it in July 2012.
Section 400.3(1) of the Code provides (and provided at the relevant time): 1. A person is guilty of an offence if: 1. the person deals with money or other property; and 2. either: 1. the money or property is, and the person believes it to be, proceeds of crime; or 2. the person intends that the money or property will become an instrument of crime; and 1. at the time of the dealing, the value of the money and other property is $1,000,000 or more.
Penalty: Imprisonment for 25 years, or 1500 penalty units, or both.
Section 400.2 provides a definition of "deals with money or other property" in the following terms: A person deals with money or other property if the person does any of the following: 1. receives, possesses, conceals or disposes of money or other property; 2. imports money or other property into Australia; 3. exports money or other property from Australia; 4. engages in a banking transaction relating to money or other property.
The prosecution particularise the dealing in this case as the 'possession' of the money used for the currency transactions and the remittal of those amounts to the accounts in China.
An "instrument of crime" is (and was at the relevant time) defined by s 400.1 as follows: "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 a law of the Commonwealth, a State, a Territory or a foreign country that may be dealt with as an indictable offence (even if it may, in some circumstances, be dealt with as a summary offence)."
The particular 'offence' alleged here that the money was 'used' in the commission of, or 'used to facilitate' the commission of, is an offence contrary to s 140 Anti-Money and Counter-Terrorism Financing Act 2006 (Cth), the 'AML Act'. That section provides that 1. A person commits an offence if: 1. The person commences to receive a designated service; and 2. The person does so using a false customer name; and 3. at least one provision of Division 2, 3, or 4 of Part 2 (of the Act) applies to the provision of the designated service. 1. Strict liability applies to the paragraph(1)(c) of the offence (see section 6.1 of the Criminal Code)
The relevant 'provision of a designated service' for the purposes of s 140(1)(c) is that of 'a non-financier carrying on a business of giving effect to remittance arrangements accepting an instruction from a transferor entity ('the customer'/ accused) for the transfer of money under a designated remittance arrangement' (s 6, "Item 31" AML Act). For the definition of 'designated remittance arrangement' and 'transferor entity' see s 10 AML Act. For the definition of 'commence' and 'receive' a 'designated service' see s 5 AML Act.

The accused's submissions

It is submitted on behalf of the accused that the definition of " instrument of crime" requires the money in the possession of the accused to be used in the commission of, or used to facilitate the commission of some other offence ('the postulated future offence' or 'intended offence').
It is submitted that it is not alleged that the money the subject of the charge was (and was believed to be) the proceeds of crime; rather, it is alleged that the accused dealt with (possessed) the money, and at the time of the dealing he intended the money would become an instrument of crime.
Further, it is submitted that it is not the prosecution case that the accused intended that the money the subject of the charge would be used in the commission of a future offence by the person or persons who were to receive the money, such as tax evasion, drug trafficking or terrorism. As far as is known, the recipient(s) could have used the money transmitted for completely legitimate purposes.
The accused understands, as the Crown made clear in its submissions, that the prosecution relies on an intention on the part of the accused to use the money "in the commission of" the offence against s 140(1), or in the alternative an intention to use the money "to facilitate the commission of" the offence against s 140(1) of the AML Act.
Reference was made to the second reading speech of the then Attorney-General The Hon Daryl Williams MP who said: "The bill will amend the Criminal Code to insert new money laundering offences replacing those in the Proceeds of Crime Act 1987 with updated provisions based on the recommendations of the Australian Law Reform Commission. The bill proposes a series of new offences graded according both to the level of knowledge required of the offender and the value of the property involved in the dealing constituting the laundering. These new offences will permit prosecutors to more accurately reflect the level of culpability of the offender in the charges they prefer and courts will be provided with a greater degree of guidance in their sentencing. The regime includes alternative verdict provisions so that where a court is satisfied that the person is not guilty of the offence charged but is guilty of another money laundering offence which carries a lesser penalty the person can be convicted of that lesser offence consistent with the rules of procedural fairness. The upper limit of the penalties will be increased from 20 to 25 years imprisonment. The scope of the offence has been expanded to include exports as well as imports of money and other property, money laundering in relation to some state and territory offences which have relevance to the Commonwealth, and where the money or property is an instrument of crime used to facilitate criminal activity, such as occurred in the lead-up to the recent terrorist attacks."
Counsel for the accused provided relevant portions of the revised Explanatory Memorandum referred to in the Second Reading Speech referred to in Milne v The Queen, (2014) 252 CLR 149.
It is submitted that the construction of the scope of s 400.3 contended for by the prosecution rendered an accused liable to imprisonment for twenty-five years, despite an absence of any intention that the intended recipient make use of the transmitted funds for any criminal purpose. Reference was made to Milne where the scope of section 400.3 was considered at [38] - [40]. At [38] the Court rejected the proposition that a broad construction of the provision allowed the facts of that case to fall within the scope of the provision: "Section 400.3(1) creates a serious offence. It is punishable by a term of imprisonment of up to 25 years. In the end the "broad construction" proffered by the respondent seemed to involve little more than the proposition that, however construed, it fits the facts of this case. As a matter of textual analysis, it does not. Purposive construction does not justify expanding the scope of a criminal offence beyond its textual limits. In this case, those limits are not narrowly defined. The language of s 400.3(1)(b)(ii), and its associated definitions, is capable of application to a range of circumstances which fall within their ordinary meanings. Its construction according to the ordinary meaning of its words is sufficient to provide a broad coverage consistent with its purpose and without resort to "extended" meanings of those words."
It is submitted that the structure of ss 400.1-400.16 Criminal Code Act reveals an intention of the Commonwealth Parliament to criminalise conduct involving the transmission of more than $1,000,000 in various ways. S 400.3 (1)-(3) identifies various mental states on the part of an accused: intention, recklessness and negligence as to whether the money to be transmitted is the proceeds of crime or will (or may) become an instrument of crime.
It is submitted that the penalties are tied to the conclusion as to the sender's mental state and vary enormously: from twenty-five years when the sender intends the money will become an instrument of crime down to five years when the sender is negligent about the issue.
It is submitted in this case that the Crown does not assert that the accused had any belief at all as to the use to be made of the transmitted funds. Instead, a technical and unsatisfactory legal construct is relied on, in circumstances where the Commonwealth Parliament has enacted other offences that carry far lower maximum penalties that address and punish the criminal conduct allegedly engaged in by the accused. A variety of other offences were created to address circumstances where an offender's culpability was at a lower level. S 400.9 entirely encompasses the accused's alleged conduct, yet the maximum penalty for a breach of s 400.9 is three years imprisonment (Shi v R [2014] NSWCCA 276 (at [41]-[46]).
It is conceded that "there can be no doubt that the prosecution case is capable of establishing that the accused repeatedly transmitted money overseas using a false identity". Sections 136, 137 and 140 of the AML Act all address aspects of the accused's alleged criminal conduct. The existence of these more appropriate penalty provisions also does not support the prosecution contention that the scope of s 400.3 extends to the alleged conduct of the accused (Chen v DPP (Cth) [2011] NSWCCA 205, per Garling J, at [80]-[87].
The breach of s 140 of the AML Act carries a maximum penalty of two years imprisonment. The terms of the provision encapsulate the actual conduct of the accused on at least a number of the occasions when he caused the money to be transmitted overseas.
It is submitted that the central issue in this trial is that of the accused's intention: did he intend that the money would become an instrument of crime? In the circumstances of this case it is submitted that question can only answered by a consideration of the accused's understanding of why the money was being transmitted to China and what the money was to be used for by the person or persons who were to receive it. There is no evidence at all that when the accused sent the money overseas he intended that the money would become an instrument of crime. The evidence in the case cannot establish this element in s 400.3 Criminal Code Act 1995. It is for this reason that it is submitted that a directed verdict is the appropriate disposition of the proceedings.
Connected to the primary submission it is also submitted that the prosecution case must fail because there was no relevant intended "use" of the money with respect to the offence against s 140(1) so as to make the money an instrument of crime.
In the event that the Court concluded that the scope of s 400.3 does extend to a circumstance where the Crown neither asserts that the money transmitted overseas was the proceeds of crime, nor that the money transmitted overseas was to be used to commit a crime in the future, it is submitted that the evidence in the prosecution case still does not establish that the accused intended that the money would "become an instrument of crime". It is submitted that the offence against s 400.3(1)(b)(ii) requires proof that the accused intended that the money "will become an instrument of crime". Applying the definition of "instrument of crime" in s 400.1, proof is required that, at the time of the dealing the accused intended that the money will be "used in the commission of, or used to facilitate the commission of" a particular type of offence.
It is not accepted by the accused that there is evidence of an intention to "use" the money in the commission of the s 140 offence, or to facilitate the commission of a s 140 offence. Reference is made to the importance of the word "use" in the definition of "instrument of crime" was central to the High Court's decision in Milne v The Queen [2014] HCA 4; 252 CLR 149. The High Court said, at [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)."
The prosecution case is that the "use" must be "in the commission of" or "to facilitate the commission of", in this case, the offence against s 140(1) of the AML Act.
Counsel for the accused referred to submissions made by the Crown at the committal proceedings that attempted to set out the relationship between the offence against s 140(1) and the "use" of the money in the commission of the offence. "In this instance the Crown submits there was an instrumental connection between the money and the intended offence because the Accused in each of the thirteen remittances intended to physically give the money to a member of the business staff with a request that the money be transferred. In order to receive the designated service, in the way in which he intended, the Accused had to provide the money to the remittance service. Had the Accused not been able to provide the money to the remittance service on his attendance, the designated service would not have been able to have been provided."
It can be seen from the above that the culmination of the reasoning is no more than a statement that the relevant dealing (the possession of the money) was simply a "necessary condition of the commission of [the] subsequent offence".
It is submitted that to more fully understand the problem, is necessary to return to the definition of "use" as discussed in Milne, at [33]. There, their Honours observed, the relevant use, "involves the 'use' of property to serve a purpose, namely the "commission of an offence" (emphasis added). The accused's purpose, or objective, on the Crown case was not to operate an account in a false name. Rather it was to transfer the money. Put another way, it can be said the accused used an account in a false name to transfer the money. He did not, however, "use" the money to serve the purpose of operating an account in a false name. In the former case, the use of the account has an instrumental connection with the transfer of the money - it served the relevant purpose. In the latter case, the money did not serve the purpose of operating the account in a false name. Rather it was no more than a necessary condition of the commission of that offence.
The evidence of Mr Ge was that the process of ascertaining the identity of the prospective customer preceded the steps that related to the transmission of the money.
The conduct involved in an offence contrary to s 140(1) is not the handing over or payment of the money to be transferred. It is the acceptance of an instruction to transfer money. The offence may be committed whether or not a person giving an instruction to transfer money actually has any money in their possession. Being in possession of the money is not even a necessary condition of the commission of any offence under s 140(1) since no money need be handed over for the conduct element of the offence to be complete.
The present situation is submitted to be relevantly indistinguishable from that in Milne. There, the dealing was the disposal of shares. The intention in disposing of the shares was to make a gain. Mr Milne also had, at the time he disposed of the shares, an intention to not declare the capital gain in the relevant tax return. The future offence (the capital gains tax offence) was therefore predicated on, and motivated by, the relevant dealing (the sale). The capital gains tax offence could not be committed without the sale of the shares. This however, was not a "use" of the shares to commit the capital gains tax offence (despite the necessary connection between the two). The sale of the shares served the purpose of realising a gain. It did not serve any purpose with respect to the commission of the capital gains tax offence. In relation to that offence it was no more than a necessary condition.
Thus, while the desire to transfer the money in a false name may have required the accused to utilise a document (the fake drivers licence) (contrary to s 137 of the AML Act) to obtain a service in a false name (contrary to s 140(1) of the AML Act) this was not a use of the money for the purposes of s 400.3.
The possession of money which it is intended to transfer under a false name was no more than "a necessary condition of the commission of [the] subsequent offence" and "does not on that account amount to the use of the property in or to facilitate the commission of that offence" (Milne at [37]). Thus, the money in the present case was not "used in the commission of" or "render(ed) easier" the commission of the relevant offence.
An intention for money to become an instrument of a particular crime involves an intention that someone use the money in, or to facilitate the engaging in, conduct (including requisite mental elements) which amounts to the crime. If money cannot be an instrument of a particular crime, there can be no intention for money to become an instrument of it. If money is incapable of becoming an instrument of an offence against s 140(1) of the AML Act then the Crown case alleging a breach of s 400.3(1) is deficient, as it cannot prove an element of that offence.
Ultimately, as it was submitted orally, the accused did not have to use the money to commit an offence contrary to s 140(1) AML Act , the use of money was not necessary to commit the offence. The accused's use of his false identification ie. driver licence (or use of a false name) was the nub of the offence, which is more consistent with the legislative purpose of the Division of the Commonwealth Criminal Code. Thus, there was not the relevant 'instrumental connection' required to be established.
An alternative submission was that there was no offence against s 140(1) of the AML Act, as particularised, capable of being established by the evidence other than in incidents 1, 2 and 6 as set out in the Agreed Facts, and thus the total of the transactions do not exceed AU$1 million.
It is submitted that the prosecution case proceeds on an assumption that the evidence establishes an offence against s 140(1) of the AML Act with respect to each incident. On that basis, each part of the money (totalling more than the $1,000,000 required for the offence against s 400.3 of the Code), is on the Crown argument, involved in the offences against s 140(1) of the AML Act.
The assumption that the evidence is capable of establishing an offence against s 140(1) in each case is 'flawed' it is submitted by counsel for the accused.
It is understood by the defence that so far as the issue of 'commencing to receive a designated service' is concerned the prosecution particularises the relevant provision applying as s 32 of the AML Act (which is in Division 4 of Part 2 of the Act). Section 32 provides: 1. A reporting entity must not commence to provide a designated service to a customer if: 1. there are no special circumstances that justify carrying out the applicable customer identification procedure in respect of the customer after the commencement of the provision of the service (see s 33); and 2. the reporting entity has not previously carried out the applicable customer identification procedure in respect of the customer; and 3. neither s 28 nor s 30 applies to the provision of the service.
Reference is made to the definition of commence to provide a designated service in s 5 and s 38 of the Act (when applicable customer identification procedure deemed to be carried out by a reporting entity).
It is submitted that putting to one side, for present purposes, (1)(a) and (1)(c), "it is apparent that s 32(1)(b) of the Act has no application in the majority of the incidents relied upon".
Section 32(1)(b) of the AML Act is directed to the reporting entity. That entity is required to carry out "the applicable customer identification procedure" unless s 32(1)(a) or (c) applies, or it has previously carried out the applicable customer identification procedure (s 32(1)(c)). In each case, other than incidents 1, 2 and 6, there is evidence that the reporting entity had previously carried out the applicable procedure. The reporting entities in those instances were not required to carry out the customer identification procedure again (and would have committed no offence against s 32 of the AML Act had they not done so). The requirement in s 140 (1) that, as particularised here, s 32 of the AML Act applied is, therefore, not satisfied. Thus, even if one were to accept that s 140(1) was satisfied with respect to instances 1, 2 and 6, the amount of money dealt with on those occasions was less than $1 million and that particular element in s 400.3(1) cannot be established on the evidence.

Crown's submissions

After referring to the Criminal Code ( Cth) provisions in s 400, it is submitted that the authorities are clear that in circumstances where the Crown seeks to rely upon s 403(1)(b)(ii) of the Code as the offence provision, the Crown must nominate an intended offence which it is alleged gives rise to the charge. Section 400.13 of the Code permits the Crown to identify an indictable offence in the commission of which, or the facilitation of the commission of which, the money is constituted as an instrument of the offence (Chen v DPP [2011] NSWCCA 205).
Here the Crown particularises the intended offence as being that the accused possessed money intending that it would be used in the commission of offences against s 140 Anti-Money and Counter-Terrorism Financing Act 2006 (Cth) - namely the receipt of a designated service on a number of occasions using a false customer name or details and that the total amount involved was more than $1 million. The Crown says the accused had possession of money or other property with the intention it would become an instrument of an offence.
By reference to its 'construction' of the provision creating the offence and the relevant elements the prosecution submits that an offence against s 400.3 can apply if a person deals with money or property, intending that, at some time in the future, the property will become an instrument of crime.
Reference is also made to Milne v R (at [37[ and [38]) where the High Court stated: [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. 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. [38] The language of s 400.3(1)(b)(ii), and its associated definitions, is capable of application to a range of circumstances which fall within their ordinary meanings. Its construction according to the ordinary meaning of its words is sufficient to provide a broad coverage consistent with its purpose and without resort to 'extended' meanings of those words.
It is argued that it is "sufficient" for the Crown to rely on possession (the first physical element) immediately before the engagement in the offending pursuant to s 140 of the AML Act (see Arora v Director of Public Prosecutions (Cth) [2011] NSWSC 552, which would also satisfy the temporal separation referred to by the High Court in Milne v R).
The Crown submits that the accused concedes possession of the money. Further, the temporal separation required by the High Court is also conceded by the accused.
The only question the Court needs to consider is that posed by the High Court in Milne v R, at [14]:- '…. Relevant to the physical element in s 400.3 (1) (a) and the element of intention in s 400.3 (1) (b) (ii), [is] whether on the Crown case, the money could be said to have been intended to become 'an instrument of crime' within the meaning of section 400.2 (1) (b) (?).
The Crown submits that an analysis of s 140 of the AML Act shows that money (in the accused's possession) is instrumental in the commission of the offence, (in other words 'has an instrumental connection') or it facilitates the commission of the offence. It was submitted that the accused could not 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.
It is the Crown's submission that it is not necessary to explore the elements of the offence for the purpose of determining whether the money could be said to have been intended to become 'an instrument of crime'.
Alternatively, if the Court is against that submission the Crown submits that the elements of the s 140 AML Act offence are: Physical element Accused commences to receive a designated service (conduct) Fault element intention Physical element Using a false customer name (circumstance) Fault element recklessness Physical element At least one provision of Division 2, 3 or 4 of Part 2 applies to the provision of the designated service (circumstance) Fault element strict liability (s 140(2) of the AML & CTF Act 2006)"

As to the first element of commencing to receive a designated service, s 6 of the AML Act sets out the activities which constitute a designated service for the purposes of the AML Act.
Item 31 of section 6 relevantly provides: Item No Provision of a designated service Customer of designated service 31 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 the transfer entity

A designated remittance arrangement is defined by s 10(1) of the AML Act as follows: 1. A reference in this Act to a designated remittance arrangement is a reference to a remittance arrangement, where: 1. at least one of the persons described in the following subparagraphs is a non-financier [1] : 1. a person who accepts an instruction from the transferor entity for the transfer of money or property under the remittance arrangement; 2. a person who makes money or property available, or arranges for it to be made available, to an ultimate transferee entity as a result of a transfer under the remittance arrangement; and 1. [repealed] 2. the remittance arrangement satisfies such other conditions (if any) as are specified in the AML/CTF Rules.
A remittance arrangement is defined by s 10(2) of the AML Act as follows: A reference in this Act to a remittance arrangement is a reference to an arrangement that is for the transfer of money or property, and includes a reference to an arrangement that, under the regulations, is taken to be a remittance arrangement for the purposes of this Act.
Transferor entity is defined by s10(3)(a) of the AML Act as follows: 1. (3) For the purposes of the application of this Act to a remittance arrangement: 1. the transferor entity is the person from whom an instruction is accepted for the transfer of money or property under the arrangement; and 2. the ultimate transferee entity is the person to whom money or property is ultimately transferred under the arrangement.
Section 5 of the AML Act contains the following definitions of commencing to provide and receiving a designated service: (a) Commence to provide a designated service means: 1. if the designated service is provided at an instant of time - provide the service; or 2. if the designated service is provided over a period of time - begin to provide the service. (b) receives a designated service: if a reporting entity provides a designated service to a customer, the customer receives the designated service from the reporting entity.
It is submitted that 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. On that basis 'money' can be an instrument of crime as envisaged by s 400.2 of the Code.
The accused intended to receive a designated service for the purposes of s 140 of the AML Act each time he conducted a transfer, and money is instrumental in that process.
In its analysis of s 140 of the AML Act, the Crown submits that the second physical element of using a false customer name has a 'fault' element of 'recklessness'.
False customer name is defined by section 5 of the AML Act as follows: false customer name means a name other than a name by which the customer is commonly known.
Recklessness is defined by s 5.4 of the Code as follows: 1. A person is reckless with respect to a circumstance if: 1. he or she is aware of a substantial risk that the circumstance exists or will exist; and 2. having regard to the circumstances known to him or her, it is unjustifiable to take the risk. 1. … 2. The question whether taking a risk is unjustifiable is one of fact. 3. If recklessness is a fault element for a physical element of an offence, proof of intention, knowledge or recklessness will satisfy that fault element.
Recklessness can be proved by knowledge (s 5.4 (4) of the Code). The Crown submits that it does not seem to be in dispute that a false name was used on multiple occasions.
The accused was not known by the name Nick Wang. The accused knew that this name was false. Accordingly, the physical and fault elements could be established.
There is a the third physical element of s 140 AML Act, which has a fault element of absolute liability: ss 28 to 34 of the AML Act comprise Divisions 2 to 4 of Part 2 of the AML Act. These provisions create a requirement for a reporting entity to carry out a procedure to verify a customer's identity before providing a designated service to the customer. Given the question posed by the High Court and submitted by the Crown to be the relevant question is 'whether on the Crown case, the money could be said to have been intended to become 'an instrument of crime' within the meaning of s 400.2(1)(b)', further analysis of the third physical element does not advance the argument further.
Section 400.3(1)(b)(ii) refers to the accused's intention. Repeating the relevant subsection, it states:- (ii) the person intends that the money or property will become an instrument of crime
Focusing on the accused's state of mind, the issue to be addressed is: did the accused intend to receive a designated service in the terms of s 140 of the AML Act? The answer to that question it is submitted must be 'yes'.
Section 4 of the AML Act, contains a simplified outline of the Act, it provides amongst other matters: A reporting entity must carry out a procedure to verify a customer's identity before providing a designated service to the customer. However, in special cases, the procedure may be carried out after the provision of the designated service.
Section 32 of the AML Act requires that, in this context, a reporting entity (a person who provides a designated service: s 5 AML Act) must carry out an applicable customer identification procedure on a customer before the commencement of the provision of a designated service, unless: 1. there are special circumstances that justify carrying out the procedure after commencing to provide the service; and 2. the reporting entity has not previously carried out the procedure; and 3. neither section 28 nor 30 applies to the provision of the service.
The prosecution referred to s 32 and submitted that it is directed at the money remitter, or the provider of the designated service, not in these instances at the accused. Section 32 places no obligation upon the accused. The accused's intention is not affected.
There are exemptions for special circumstances, which provide that the procedure may be carried out after the provision of the designated service. Chapter 46 of the AML Rules provides for what constitutes special circumstances, they do not apply in the context of this service.
Subsection 32(1)(c) concerns ss 28 and 30 of the AML Act. Section 28 concerns pre-commencement customers. Section 30 is concerned with low-risk designated services. The accused was not a pre-commencement customer. The designated service provided was not a low-risk designated service.
Applying these matters to the facts of this case it is submitted that over a period between 27 May 2012 and 17 July 2012, the accused Cheng 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 transaction he provided the money remitter with a false customer name.
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 accused engaging in conduct (at the same time or different times) that constitutes an offence against a provision of this Division. 2. If: 1. a single charge is about 2 or more such instances; and 2. 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 Crown submits that on each of the 11 occasions that the accused attended the money remitter he intended to remit funds overseas in a false name using that money remitter, that is he was intending to commit an offence, intending the money in his possession would become an instrument of the offence, each time a separate offence against s 140(1) of the AML Act.
These submissions are said to be sufficient answer to the argument of the accused.
If the Court is against the Crown on that aspect the following submissions are made.
Section 140 of the AML Act is an equivalent provision to s 24 Financial Transactions Reports Act 1988 (the FTRA), which criminalises the opening and operating [a bank account] in a false name [2] . Whereas s 24 deals of the FTRA with 'cash dealers', s 140 deals with the provision of all designated services.
On each and every occasion the money remitter remitted funds overseas, the money remitter was required to comply with at least one provision of Division 2, 3 or 4 of Part 2 of the AML Act. The relevant provision in this case being s 32 of the AML Act - Carrying out the applicable customer identification procedure before the commencement of the provision of a designated service. The money remitter could not commence to provide the designated service unless he complied with s 32 on each instance he remitted money overseas.
Section 32(1) (being part of Division 4) requires a reporting entity not to provide a designated service unless certain criteria are satisfied. The reporting entity needs to be satisfied, on each occasion that a designated service is to be provided, that those criteria have been complied with.
On the first occasion that the accused 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 regards the accused. However, on each and subsequent occasion the accused remitted funds with the same money remitter the money remitter still had to comply with s 32 . That is the money remitter could not remit the funds unless all the conditions in s 32 were satisfied.
Each subsections 32(1)(a) to (c) are conjunctive. This is made clear by the use of "and" [3] in the section.
Section 32(1)(b) of the AML Act therefore has application in all 11 incidents, because although the money remitter may not have been required to carry out the customer identification procedure in all instances, the money remitter still had to comply with s 32(1)(b) in all instances itself - that is, the money remitter could not have commenced to provide the designated service unless he had previously carried out the applicable customer identification (emphasis added by thee prosecutor).
The accused had never given his true identity, he was dealt with by the money remitter as another person. He was required to give proper identification. The accused failed to do this on every occasion. He had never been identified by the money remitter in his true name, so on each occasion s 32 had to be carried out.
Giving the section this interpretation gives due regard to the objects of the legislation.
Therefore on each of the 11 occasions where the accused remitted money overseas, that is, received a designated service using a false customer name, he committed an offence against s 140 (1) of the AML Act. The Crown relies on the commission of this offence as evidence of the accused's intention when dealing with money prior to each of the remittances.

Consideration

There is no dispute as to the relevant test to applied as to whether there has been a prima facie case has been established or not (see R v R (1989) 18 NSWLR 74, at 77C, per Gleeson CJ). Is there evidence upon which the jury properly directed could properly convict, or is there evidence upon which the accused could lawfully be convicted? I have set out in considerable detail the submissions of both parties because the matter is to be decided in the context of the detail and the skill of the contentions of the parties. The matter is not without complexity, as the course of the litigation in Milne makes clear, with four Supreme Court Judges being at odds with by five High Court Judges as to the application of the law to the facts of that case. What was ultimately obvious to the High Court, was not obvious to the Court of Criminal appeal.
From the judgment of the High Court, particularly focusing upon the Court's findings at [37]-[38], I have concluded, taking into account the submissions of the accused's counsel concerning legislative purpose, that an offence pursuant to s 140(1) AML Act is a relevant 'indictable offence' for the purposes of s 400.3 of the code. In the context of the 'facts' of this case the 'possession of the money' in respect of each incident is relevantly capable of establishing an 'instrument of crime', in that handing over of the money by the accused on each of the 11 occasions particularised is capable of establishing a relevant 'use' in the commission of, or 'use to facilitate' the commission of, an offence against 'a law of the Commonwealth', to wit s 140(1) AML Act .For the purposes of the conclusions I have reached I accept the Crown's analysis of s 400 of the Code and its relationship with s 140 AML Act , as well as the Crown's analysis of the structure of that later Act as it informs the character of the offence created under s 140 of that Act.
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. The situation is not analogous to the situation in Milne because the 'use' of 'the property' there was not necessarily connected to the criminal offence that would permit it at law to be portrayed as 'an instrument of crime'. It was a condition precedent to the commission of the relevant crime, but the impugned transaction was not of itself, a 'use' in the commission of a crime or a 'use to facilitate a crime'. Here, the possession of the money was integral to the commission of the crime. The intended use of the money was "instrumentally connected" to the commission of or the facilitation of the commission of the offence.
I accept the Crown's central contention that the use of a false identification, by itself, is not the essence of the conduct of the accused required to establish the relevant indictable offence with no regard to the accused's possession of the money used to affect the remittal transaction which caused the accused to ' commence to receive a designated service'. The purpose of receiving the relevant 'designated service' is to transfer the money in the accused's possession.
I do not accept the submission of the accused that in addressing the question of whether (I take it, 'prima facie' the evidence can establish) the accused intended that the money in his possession become an 'instrument of crime',that question can only be answered by consideration of the accused's explanation of why the money was being transmitted to China (and how) the money was to be used by (the recipients).
The purpose of the transfer and the intentions of the recipients are irrelevant in establishing the relevant indictable offence (for the purposes of establishing the money was relevantly an 'instrument of crime') for which the money is to be 'used' or the money is 'used to facilitate'.
I do not accept the related argument that there is no evidence that on each occasion that the accused 'sent money overseas 'he intended that the money become an instrument of crime'. The relevant intent is concerned with commencing to receive a designated service by using a false customer name. It is not concerned with an intent on the part of the accused that the sending of the money would have any particular purpose.
It has not been submitted that the 'indictable offence' particularised by the prosecution cannot at law satisfy what constitutes a relevant offence for the purposes of s 400.3 of the Code.
I understand, in the context of what was raised in the Second Reading speech of the Honourable Attorney (as he then was) and the Memorandum, that the particular offence relied upon here is removed from the types of financial activity contemplated in the wider contemporary setting referred to in submission. But to my mind although the legislative purpose is relevant to understanding the provision that establishes the offence, it does not displace the ordinary meaning of that provision and the related provisions with which I am concerned, particularly relevant provisions in the AML Act. That argument by the accused falls away when it is understood that the provision (s 400.3) does not preclude consideration of offences that are of themselves far less serious, seen individually, than the offence created by the primary offence with which we are concerned here.
A number of the complaints or arguments put by the accused are in essence directed at the exercise of prosecutorial discretion in this matter having regard of the choice of the appropriate charge to be laid given the hierarchy of charges available to the prosecution within s 400 of the Criminal Code. The issues thrown up by those matters are not germane to determining whether there is a prima facie case made out by the prosecution on the evidence available.
As for the alternative submission that the only incidents here particularised that prima facie satisfy s 140(1) AML Act are not sufficient to establish that more than $1 million was relevantly 'dealt' with (ss 400.3(4)) I do not consider that the matters raised by the accused are relevantly questions( or a question) of law. Noting the respective submissions of the parties, the critical issue of whether there were sufficient 'incidents' that constituted 'commencement(s)' of receipt of a 'designated service 'in order to satisfy s 140(1), having to the terms of s 140(1)(c) and whether the related provisions identified in that sub-paragraph are satisfied are issues of 'fact' for the jury to decide.
The issue of how these matters are to be left to the jury, particularly the terms of s 140 AML Act and related provisions, and the extent to which they are to be explained will need to be a matter for discussion or submission from the parties before the jury returns.

Conclusion

I decline to direct a verdict of 'not guilty'.

Endnotes

S 5 of the AML Act contains the following definition of non-financier: means a person who is not: (a) an ADI; or (b) a bank; or (c) a building society; or (d) a credit union; or (e) a person specified on the AML/CTF Rules. The AML Rules provide the following addition to the definition of non-financier: For paragraph (e) of the definition of 'non-financier' in s 5 of the AML/CTF Act, the following persons are specified: (1) a person carrying on a account practice; or (2) a person carrying on a law practice.
Anti-Money Laundering and Counter-Terrorism Financing Bill 2006 (the Bill) - Second reading: The Bill will impose a number of obligations on businesses called reporting entities under the legislation, including customer due diligence, reporting, record-keeping and developing and maintaining an AMLCTF program. The Bill - Replacement EM: this offence [s140] implements the first paragraph of FATF Recommendation 5 (Financial institutions shall not keep anonymous accounts or accounts in obviously fictitious names)
From Victims Compensation Fund v Brown (2003) 201 ALR 360 at [13]: The ordinary meaning of 'and' is conjunctive.

Amendments 18 May 2016 - Paragraph 101 amended to add the word 'explanation' after the word 'accused's'. 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: 18 May 2016

Anti- Money Laundering and Counter Terrorism Act 2006(Cth)

Anti-Money and Counter-Terrorism Financing Act 2006(Cth)

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