R v Zhang

District Court of NSW|2023-12-07

Solicitors: Commonwealth Director of Public Prosecutions (Crown) International Lawyers Co-operative (Offender) File Number(s): 2022/00122559

THE STATUTORY OFFENCE

The offence as provided in the Code is as follows: 400.9 Dealing with property reasonably suspected of being proceeds of crime etc. … (1AB) A person commits an offence if: (a) the person deals with money or other property; and (b) it is reasonable to suspect that the money or property is proceeds of indictable crime; and (c) at the time of the dealing, the value of the money and other property is $1,000,000 or more. Penalty: Imprisonment for 4 years, or 240 penalty units, or both. … (2) For the purposes of this section, it is taken to be reasonable to suspect that money or other property is proceeds of indictable crime if: … (c) the value of the money and property involved in the conduct is, in the opinion of the trier of fact, grossly out of proportion to the defendant's income and expenditure over a reasonable period within which the conduct occurs; or … (4) Absolute liability applies to paragraphs (1AA)(b) and (c), (1AB)(b) and (c), (1)(b) and (c) and (1A)(b) and (c). (5) This section does not apply if the defendant proves that he or she had no reasonable grounds for suspecting that the money or property was derived or realised, directly or indirectly, from some form of unlawful activity. Note: A defendant bears a legal burden in relation to the matter in subsection (5) (see section 13.4).

FACTS

The parties proposed Draft Agreed Facts as appear in the Crown Bundle on Sentence, Exhibit A. What follows are facts derived from that document but with amendments as proposed by me and agreed to by the parties during the sentencing hearing: 1. The Offender holds tertiary education qualifications earned in China in the field of Engineering. He arrived in Australia in July 2016 on a Student Visa and obtained his Master of Professional Accounting from the University of Sydney. 2. In Australia, the Offender was first employed by A&E Australia Pty Ltd ("A&E") on 1 September 2018. A&E operates an Australian based business selling and exporting baby formula, health products and skincare products. Its market is in China. All of the offending activity took place in the course of the Offender's employment and as he was directed to do. 3. A&E operates a daigou business, which is a form of cross-border business that facilitates the buying and selling of international products on behalf of customers in mainland China. Yonggang Qin ('Qin' a.k.a. Allen Qin) has been the sole director, secretary, public officer, and sole shareholder of A&E since its incorporation. 4. The Offender was employed to perform A&E's warehouse operations bookkeeping throughout the offending period. This work was in connection with his Temporary Skill Shortage Visa ("482 Visa"). A&E is his sponsor. His Visa is due to expire on 21 November 2024. A&E employed external accountants who delivered general bookkeeping and accounting services including as tax agents for A&E, preparing its Business Activity Statements, Goods and Services Taxes, and Company Tax Returns for lodgement with the Australian Taxation Office ("ATO"). 5. Between 17 January 2022 and 28 April 2022 (the period of the offending), the Offender dealt with $3,677,275 of physical cash comprised of Australian bank notes of various denominations. He did so by taking possession of cash and depositing it into A&E's Commonwealth Bank of Australia ("CBA") account. The deposits were made at two different branches. At the trial, the jury watched CCTV of the Offender at A&E's warehouse receiving from courier drivers shopping bags of cash in large values as appear in the schedule to paragraph (19) of these facts. 6. The money is reasonably suspected of being the proceeds of indictable crime on the basis that the value of the money was grossly out of proportion to the Offender's income and expenditure. The Offender's salary earned from A&E, as reported to the ATO, was $38,772 (in 2019), $51,072 (in 2020), $58,795 (in 2021), and $71,969 (in 2022). 7. That is, the jury verdict of guilty requires fact-finding for the purpose of sentence, on the basis of the "deeming" provision, s 400.9(2)(c) of the Code and rejection of the Offender's s 400.9(5) defence. 8. For the purpose of sentencing, the parties agree that: 1. The gross disproportion between the income and expenditure of the Offender, and the value of his dealings in the money, is the only relevant basis for the guilty verdict. 2. There is no evidence to prove the fact of a particular indictable crime from which the proceeds are reasonably suspected of having been derived or realised. 3. For the purpose of sentencing, the jury rejected the Offender's defence that at the time of his dealing with the cash he had no reasonable grounds to suspect that the money was derived or realised directly or indirectly from some form of unlawful activity. 1. Between 17 January 2022 and 28 April 2022 (the period of the offending), the Offender was directed by Qin to meet with certain individuals for the collection and processing of large amounts of cash. The Offender received certain cash amounts, which were dropped off at A&E premises in person, in cardboard boxes or bags, as set out in the schedule to paragraph (19) below. 2. The Offender would count the cash received, occasionally adding or removing notes. The receipt of cash, as well as the addition or subtraction of notes, was recorded in a warehouse, handwritten cash register maintained by the Offender as couriers dropped off large sums of cash and took goods: 1. Between 17 January 2022 and 14 March 2022, in accordance with Qin's directions, the Offender recorded cash received and spent in the warehouse, handwritten cash register book, but not all of it. 2. On 14 March 2022, the Offender was directed by Qin to change the way that he made entries in the warehouse, handwritten cash register book. Qin instructed the Offender in the following terms: "going forward enter the money received from Little R into the account". The reference to "account" in the instruction from Qin was a reference to the recording of transactions in the warehouse, handwritten cash register book. 3. From 15 March 2022 to 28 April 2022, the Offender recorded all of the incoming cash and cash spent in the warehouse, handwritten cash register book, as he was instructed by Qin (above) to do. 1. For the purpose of banking cash, the Offender would transfer the cash into reusable bags, before depositing the sum of cash into the A&E CBA account, at the direction of Qin. 2. The Offender received instructions from Qin that he should not deposit "flat" amounts of cash at the bank, and that cash deposits should not exceed $150,000, as that amount would require the bank manager's authorisation and would be "very troublesome". 3. In relation to the 28 sums of cash, all but three ranged between $100,000 and $149,985. The Offender deposited 27 of the sums dealt into A&E's bank account at either the CBA Sydney Markets Branch or the CBA Auburn Branch as shown in the schedule at paragraph (19) below. The last cash sum was in a shopping bag when he was arrested on his way to a CBA branch to deposit it. 4. On 28 April 2022, the Offender was observed leaving the premises of the A&E warehouse carrying a black shopping bag. He was driven by a co-worker to the business district of Homebush West, where he was apprehended by the Australian Federal Police ("AFP"). 5. The Offender was placed under arrest on 28 April 2022. During a search of the vehicle in which he was travelling, police located the black shopping bag containing $143,295 in Australian banknotes, and a handwritten note on which "143,295" was written. The cash was to be deposited at the Homebush West Branch of the CBA. 6. The Offender cooperated with law enforcement agencies and provided the relevant passcode and credentials to access his phone device. 7. The Offender was granted bail on 29 April 2022, and it is agreed, for the purpose of sentencing, that he was totally deprived of his liberty for a period of one day. 8. The Offender cooperated with law enforcement agencies by providing contact details for Qin in China. 9. The 28 cash deposits made by the Offender were as follows: Transaction Date Transaction Amount ($AUD) Deposit Location 28/04/2022 143,295 N/A - arrested prior to deposit 26/04/2022 149,985 Sydney Markets Branch 22/04/2022 79,955 Auburn Branch 21/04/2022 149,955 Sydney Markets Branch 19/04/2022 147,145 Sydney Markets Branch 13/04/2022 147,975 Sydney Markets Branch 11/04/2022 149,875 Sydney Markets Branch 7/04/2022 149,925 Sydney Markets Branch 4/04/2022 149,855 Sydney Markets Branch 31/03/2022 121,295 Sydney Markets Branch 28/03/2022 149,335 Sydney Markets Branch 24/03/2022 149,695 Sydney Markets Branch 21/03/2022 143,195 Sydney Markets Branch 17/03/2022 149,885 Sydney Markets Branch 14/03/2022 149,725 Sydney Markets Branch 10/03/2022 133,675 Sydney Markets Branch 7/03/2022 141,545 Auburn Branch 3/03/2022 148,095 Auburn Branch 28/02/2022 142,565 Sydney Markets Branch 24/02/2022 114,355 Auburn Branch 21/02/2022 133,175 Sydney Markets Branch 17/02/2022 138,075 Auburn Branch 14/02/2022 140,050 Sydney Markets Branch 10/02/2022 113,210 Sydney Markets Branch 27/01/2022 50,000 Sydney Markets Branch 24/01/2022 110,065 Auburn Branch 20/01/2022 101,370 Auburn Branch 17/01/2022 80,000 Auburn Branch

BACKGROUND AND SUBJECTIVE CASE FACTS

The Offender was born on 15 March 1987. During the 3 month period of the offending, he reached the age of 35 years. The Offender has no antecedent criminal history either in Australia or in China. He performed well both as a student and as a member of his community whilst living in China according to documents contained in the Defendant's Tender Bundle, Exhibit 1. That is, until his arrival in Australia in April 2016 on a Student Visa, he continually graduated through stages of his education as a "High Achiever" and as an "Outstanding Student in both Moral Study and Academic Performance". Prior to arriving in Australia, he achieved a Degree of Master of Engineering from China University of Petroleum (Beijing). Whilst on his Student Visa, on 5 October 2018, he achieved a Degree of Master of Professional Accounting from the University of Sydney. At about that time the Offender was granted a 485 Visa. On 21 November 2020 the Offender was granted a 482 Visa, the duration of which permits him to stay in Australia until 21 November 2024. Conditions of the 482 Visa included that the Offender maintain work with his sponsor and that was Qin's company, A&E.
Whilst in Australia, the Offender has complied with his tax and insurance obligations.
The Defendant's Tender Bundle includes two references to the Court, by friends of the Offender who wrote of his good character. Each of them has only known him in Australia.
The Offender has written a Letter of Apology to the Court dated 28 November 2023. Significant parts of the letter speak of facts about which there was no evidence at trial and which, if in evidence, might have been relevant to the jury's consideration of whether or not the Offender had reasonable grounds for suspecting that the money was derived from some form of unlawful activity within the meaning of s 400.9(5) of the Code. For that reason, acceptance of those facts, in my opinion, would be an improper basis upon which to sentence the Offender because those facts are not consistent with the verdict of guilty following the trial. The Offender did not give evidence at trial. His forensic choices made at trial, in my opinion, do not permit him to now introduce that untested evidence of facts not considered by the jury.
The Offender did not give evidence in the sentencing hearing. If the new facts concerning his employment in dealing with the money, stated in his Letter of Apology, were to be admitted; I would treat them as untested assertions, with such caution that I would not find them to be persuasive. In the sentencing hearing, Counsel for the Offender did not argue against the correctness of my approach of refining the Letter of Apology to pertinent parts, as I set out now. The Crown did not speak against so proceeding.
In my opinion, the truly pertinent parts of the Letter of Apology for consideration in this sentencing exercise are as follows: "I apologise to the Court for not reasonably suspecting that the cash that I handled from January 22 to April 22 was the proceeds of indictable crime. It did not cross my mind that the cash could be suspected of being proceeds of some illegal activity… In my mind, paying for goods with cash was one of the alternative methods available for payment… In January 2022, when I started to receive and bank cash, I was continuing a practice that had been part of the company's procedure since the company started trading or shortly thereafter (as I had understood). The procedure was certainly in place by the time I started working in the business in 2018. The only difference was that before January 2022, that is before my employer Allen Qin left to go to China, he was personally receiving and banking the cash.… I did not even conceive of the idea that the money could have come from some illegal activity."
In my opinion, the verdict is consistent with conduct shown in CCTV evidence in the trial. A striking feature of what he actually did, shown by the CCTV evidence, is the receiving and handling of the cash. That vision necessarily characterised the impugned activity of the Offender. The CCTV shows the drivers exiting courier vans which had pulled up outside the office to the warehouse and walking inside to deliver to the Offender shopping bags or boxes containing piles of cash in Australian currency notes which, in the common experience of our community, were extraordinary. The Offender was seen to deal with the courier in a relaxed, businesslike fashion. He made entries in paperwork and counted the cash. He was arrested when in the possession of $143,295 cash. By way of illustration in words, to convey the impression of the CCTV shown before the jury; $140,000, even if in the largest denomination of $100 notes, is 1,400 notes.
Other features of the offending were not as striking or out of the ordinary. The couriers did load goods into their vans before leaving. Whilst the Offender achieved tertiary qualifications in accounting from the University of Sydney, his actual functions were of the nature of warehouse operations bookkeeper and clerk. There is no evidence of him performing bookkeeping, entering cash receipts, depositing money, or in any other way having dealt with the cash; other than as he was precisely directed by Qin to do, in the course of his employment. He is not to be sentenced as if his role was of higher authority, such as might be that of an accountant for the company's overall business. He was a mere warehouse operations bookkeeper, performing clerical roles of receipt, handling, making entries in warehouse books and banking.
It is not suggested that there was no record of the cash transactions. All of the cash was deposited in a single CBA account of A&E. Nor is there any evidence of the Offender's involvement, by way of participation, in a criminal activity from which the proceeds were derived. There is no evidence of planning or diversion of money on the part of the Offender. There is no evidence of the Offender possessing actual knowledge or suspicion that the money was derived from unlawful activity. There is no evidence that the Offender was rewarded beyond his modest and normal salary for working as the warehouse operations bookkeeper and clerk. Of course, the Offender did benefit to the extent that he remained employed by the company and, in that way, received the benefit of his 482 Visa.

THE STATUTORY SCHEME

As stated in the Explanatory Memorandum to the Crimes Legislation Amendment (Economic Disruption) Bill 2020, House of Representatives at [3], the offence was introduced into the variety of existing money laundering offences to "address the behaviour of modern money laundering networks and remove unnecessary obstacles to securing convictions and appropriate sentencing outcomes" (Crown Written Submission, MFI 1 at [8]).
S 400.9(1AB) of the Code commenced on 17 February 2021. Crown Written Submissions on sentence (MFI 1), informed that there are yet to be any appellate considerations of sentencing under the section. My own research confirmed that result. Nevertheless, in my opinion, guidance in the considerations for sentencing for money laundering offences is found in R v Ly [2014] NSWCCA 78 and R v Yi-Hua Jiao [2015] NSWCCA 95; both of which decisions considered sentencing for offending against s 400.9(1) and preceded the commencement of s 400.9(1AB). With the assistance of that guidance:

The s 400.9(1AB) offence is part of a statutory scheme, the following description of which was adopted by the Court of Criminal Appeal in Milne v R (2012) 259 FLR 42; [2012] NSWCCA 24 at [134] and the Court in R v Yi-Hua Jiao at [29], as originally observed by Johnson J in R v Milne (No 1) (2010) 260 FLR 166; [2010] NSWSC 932 at [161] - [164]: "[161] When provisions such as the money laundering offences contained in section 400 Criminal Code Act 1995 are enacted, it is clear that care must be exercised by a prosecutor in their use. As the authorities to which I have referred make clear, the money laundering provisions are broad with a capacity to extend to a wide range of circumstances. By their nature, they are likely to be intertwined with other criminal conduct. [162] By the enactment of these provisions, the Commonwealth has determined that criminal offences of this type are necessary to deal with the wide range of conduct which has manifested itself in contemporary society, with consequences adverse to the public interest including the revenue. ... [164] At a Commonwealth level, the money laundering offences in section 400 constitute a 21st century response to antisocial and criminal conduct commonly with international elements."
The s 400.9(1AB) offence is to be recognised as part of that statutory scheme in the Code criminalising money laundering and making the amount of money involved a paramount consideration: R v Yi-Hua Jiao at [66]. Obviously, the sum of $3,677,275 well exceeds that threshold figure of $1,000,000.
I observe that for offending involving $10,000,000 or more, the offence against s 400.9(1AA), the maximum penalty is imprisonment for 5 years, or 300 penalty units, or both.
Culpability of the offender's state of mind concerning the source of the money for offences involving the proceeds of crime or what is to become of it, is a significant consideration.
The number of transactions and the period over which they occur are significant matters because they may indicate the extent of the offender's criminal dealing.
Money laundering is very serious criminal activity in respect of which the need for general deterrence is of particular significance: R v Yi-Hua Jiao at [31].
When the activity is not engaged in for personal reward such as profit, the prior good character of the offender remains a significant consideration.
The offender's state of mind and his or her level of awareness or regard as to the illegality of the conduct is clearly a matter that increases the seriousness of the offence.
But care must be taken so as not to breach the principles in R v De Simoni (1981) 147 CLR 383 at p 389; [1981] HCA 31. "In imposing sentence, the court is entitled to consider all the conduct of the offender, including that which would aggravate the offence, but is not permitted to take into account circumstances of aggravation which would have warranted a conviction for a more serious offence": R v Yi-Hua Jiao at [33].
"At the same time, care is required to avoid a type of reverse De Simoni error, by taking into account on sentence for a s 400.9 offence the absence of features which would have rendered the offender liable to conviction for another money laundering offence punishable by a greater penalty.": R v Yi-Hua Jiao at [34].

PART 1B, S 16A OF THE CRIMES ACT

I must sentence the Offender in accordance with Part 1B and s 16A of the Crimes Act 1914 (Cth) ("Crimes Act Commonwealth"). I must impose a sentence that is of a severity appropriate in all the circumstances of the offence: s 16A(1) Crimes Act Commonwealth.
Important facts for consideration are (s 16A(2) Crimes Act Commonwealth): 1. The nature and circumstances of the offending consistent with the verdict, and importantly, do not include that the Offender actually knew or suspected that the money was proceeds of indictable crime. 2. The Crown did not prove, and the jury did not identify, an indictable crime from which the proceeds could reasonably be suspected of having been derived or realised. 3. It is consistent with the verdict that because the value of the money received, handled, and banked by the Offender, about which he made recordings in the warehouse, handwritten cash register, was so grossly out of proportion with his income and expenditure over the 3 months of the offending, that he was found guilty because the money with which he dealt, was "taken to be" (deemed) reasonably suspected to be the proceeds of indictable crime pursuant to s 400.9(2)(c) of the Code. 4. The Offender did not receive reward for his impugned activity except for the fact that he maintained his employment and the benefit of his 482 Visa by doing that which he was told to do by his employer. 5. The Offender was not shown to have acted in association or connection with an underlying unlawful activity associated with the money. 6. Given the extraordinary amounts of cash dealt with, in the circumstances which I have described, the Offender cannot be considered not to have had reasonable grounds for suspecting that the money was derived or realised, directly or indirectly from some form of unlawful activity (the jury rejected his s 400.9(5) defence). 7. The period of the offending of approximately 3 months, in my opinion, was neither significantly short nor long for offending of this type. 8. The handling on 28 occasions of the extraordinarily large amounts of cash transacted, depicted on the CCTV evidence, is striking and characterises the offending conduct. 9. The Offender's activity was merely clerical. 10. The Offender has shown only qualified contrition. He has apologised "for not reasonably suspecting that the cash that I handled… was the proceeds of indictable crime." Of course, assessment of contrition from those expressions is impressionistic. But in my view, those expressions maintain the state of mind of a personal belief of moral innocence. They fall short of acknowledging, in a common sense way, that dealing in such large cash sums in transactions, as he was directed to do, was prone to raise suspicion on his behalf. The author of the SAR described this as the Offender displaying limited insight into his offending. In my opinion, the Offender's description of his qualified acceptance of his guilt is based on a claim of naivety which is not representative of his extraordinary dealing in cash, particularly given his intelligence, education, and life experience at age 35 years. 11. The Offender has cooperated with law enforcement agencies. He cooperated with the AFP when arrested including by provision of the code for access to his mobile phone; by providing to the AFP the contact details for Qin in China; and by facilitating some utilitarian efficiency and cost saving during the hearing by entering into Agreed Facts pursuant to s 191 of the Evidence Act 1995 (NSW). 12. The Offender remains employed by A&E, but I understand it to be not contested that the company no longer deals in cash as it did during the period of offending. 13. The SAR assessed him as being of low risk of reoffending. 14. Whilst his Australian Visa status is not a consideration in the assessment of appropriate punishment, the consequence of his conviction has no doubt weighed heavily on him because of its potential effect upon that status. For these reasons, in my opinion, specific deterrence is not a significant consideration in the synthesis of sentencing the Offender. 15. Whilst there is no specific injury or loss identified; harm to the community, which the offence is statutorily designed to protect against, is inherently as significant as is the value of the money being more than 3.6 times the threshold value.
As was the evidence before the jury of Ms Celona, Forensic Accountant retained by the AFP, the very nature of money laundering often involves the transacting of illicit monies through a legitimate business so that at the other end of the transaction, the fund no longer appears to be illicit. That money laundering is difficult for the authorities to detect and to prosecute, gives reason to the legislative purpose of the "deeming" provision under s 400.9(2)(c) which applied in this case.
That the Offender's dealing in cash monies grossly disproportionate to his personal earnings and expenses over the period, meant that it was taken to be reasonable to suspect that the money was proceeds of indictable crime, and whilst bearing in mind that the activity involved repeated dealing in those extraordinarily large cash sums; in my assessment, the Offender's role was that of a clerical "foot soldier".
In turn, that legislative design of the offence speaks of the need for general deterrence to discourage persons, whose conduct is like that of the Offender's here, from participating in the money laundering activity of their employer or a group with which they are involved.
The SAR assessment of his low risk of recidivism, the Offender's otherwise good character, his tertiary qualifications in the fields of engineering and accounting, his willingness and assessed ability to undertake intervention, including community service without conditions, as well as his age of 35 years, are all factors which, in my opinion, support assessing the Offender to have excellent prospects of rehabilitation.
Special circumstances are his excellent prospects of rehabilitation, that he has never before experienced imprisonment, and that if imprisoned he would suffer the hardship of being very distant from his family and friends in China.
I am informed that the Crown seeks to recover the $143,295 seized on his arrest and that the Offender does not oppose that recovery.

WHERE IN THE PRESENT STATUTORY SCHEME DOES S 400.9(1AB) FALL?

In R v Ansari (2007) 70 NSWLR 89; [2007] NSWCCA 204 at [118] - [119]; [124], Howie J recognised that money laundering offences involve activity of a wide ambit, including the receiving or disposing of money, importing it into or exporting it out of Australia, and engaging in banking, so that the money or property can be used in connection with, or can arise from, serious crime. At [119] - [121] his Honour said: "… Not only is there a very wide ambit in relation to the conduct caught by the offences but there is also a substantial range of criminal activity to which the money or property could relate, being limited in effect to an indictable offence of the Commonwealth or a State or Territory. The offences are not concerned only with the source of the money or property that is dealt with but also its ultimate use. The offences cover money obtained illegally or to be used for illegal purposes or dealt with in a manner that is illegal. With offences that are so wide ranging in their scope it becomes somewhat difficult to imagine an offence falling within the worst category of its kind against which any particular offence can be measured. It might be thought that dealing with money that is to be used for the purposes of terrorism might be within the class of the most serious offences encompassed by the sections in the Division. But it is perhaps not so difficult to conceive of offences that will form the bulk of conduct falling within the scope of the Division that would come before the criminal courts. The most obvious will relate to money obtained as a result of drug activity and that is being dealt with in order to make it more difficult to track or identify as the proceeds of a particular crime. It may also be money that has been legitimately earned but is to be dealt with in such a way as to disguise its source in order, for example, to defraud the taxation office. But frequently it will be impossible for the authorities to identify the origins of the funds or what is ultimately to be the use made of them, yet it can be shown that the manner of dealing with them was a breach of the law… It may be the case that the persons dealing with the money do not know its source or ultimate destination and do not care provided they are being paid for rendering a service."
His Honour identified the legislative intent to structure a hierarchy of seriousness of offending conduct for money laundering offences. Legislative amendment has occurred since R v Ansari. The subject offence is a recent addition to the hierarchy. It is important, when I come to consideration of sentencing by courts across Australia for money laundering offences, for the purposes of consistency of sentencing (Hili v The Queen (2010) 242 CLR 520; [2010] HCA 45) to be mindful of where the subject offence falls in that hierarchy and that those cases are not directly comparable, in the sense that they do not involve sentencing for this offence. In that process of reasoning, it is important to bear in mind his Honour's observation at [122]: "The legislation itself has attempted to structure offences to give some guidance as to the seriousness of the conduct by reference to the applicable maximum penalty for each offence. The scheme is that the greater the sum of money involved, the more serious the offence. But the legislation also takes into account the mental state of the offender, so that an offence involving the intentional dealing with proceeds of crime or instruments of crime is more serious than one where the state of mind is recklessness as to the criminal nature of the property..." [See also R v Yi-Hua Jiao at [19] - [25]]
Division 400 of the Code is readily recognised to presently contain the same broad terminology relevant to the variety of statutorily prescribed money laundering offences, spoken of by Howie J in R v Ansari: see for instance the definition of "deals with money or other property": s 400.2; the meaning of "effective control of money or other property": s 400.2AA.
Amongst the hierarchy of seriousness of the prescribed offences, I point to the following in order to give context to where s 400.9(1AB) falls:

s 400.3(1) - dealing with money believed to be proceeds of an indictable crime or intending that the money will become an instrument of crime and at the time of dealing, the value of the money or other property is $1,000,000 or more - maximum penalty is imprisonment for 25 years, or 1500 penalty units, or both; s 400.3(1A) - engaging in conduct concealing or disguising money or property the person believes to be proceeds of a general crime of value of $1,000,000 or more - maximum penalty is imprisonment for 25 years, or 1500 penalty units, or both; s 400.3(1B) - the same elements as s 400.3(1), the money or other property involved on 2 or more occasions totalling $1,000,000 or more - maximum penalty is imprisonment for 25 years, or 1500 penalty units, or both; s 400.3(2A) - the same elements as for s 400.3(1), save that the state of mind element is recklessness - maximum penalty is imprisonment for 12 years, or 720 penalty units, or both; s 400.3(2B) - same elements as for s 400.3(2A), save that the total value of two or more engagements in conduct is $1,000,000 or more - maximum penalty is imprisonment for 12 years, or 720 penalty units, or both; s 400.3(3) - same elements as for s 400.3(1), save that the state of mind element is negligence - maximum penalty is imprisonment for 5 years, or 300 penalty units, or both.
s 400.4(1) - dealing with money or other property the person believes to be proceeds of indictable crime or will become an instrument of crime of value of $100,000 or more - maximum penalty is imprisonment for 20 years, or 1200 penalty units, or both; s 400.4(1B) - same elements as for s 400.4(1), involving 2 or more transactions for total value of $100,000 or more - maximum penalty is imprisonment for 20 years, or 1200 penalty units, or both; s 400.4(2) - same elements as for s 400.4(1), save that the state of mind element is recklessness - maximum penalty is imprisonment for 10 years, or 600 penalty units, or both; s 400.4(3) - same elements as for s 400.4(1), save that the state of mind element is negligence - maximum penalty is imprisonment for 4 years, or 240 penalty units, or both.
s 400.5(1) - dealing with money or other property which the person believes to be proceeds of indictable crime or intends the money or property will become an instrument of crime of value of $50,000 or more - maximum penalty is imprisonment for 15 years, or 900 penalty units, or both; s 400.5(2) - an offence of the same elements as s 400.5(1), save that the state of mind element is recklessness - maximum penalty is imprisonment for 7 years, or 420 penalty units, or both; s 400.5(3) - an offence of the same elements as s 400.5(1), save that the state of mind element is negligence - maximum penalty is imprisonment for 3 years, or 180 penalty units, or both.
s 400.8(1) - dealing with money or property of any value and the person believes it to be proceeds of indictable crime or intends that the money or property will become an instrument of crime - maximum penalty is imprisonment for 1 year, or 60 penalty units, or both; s 400.8(2) - an offence of the same elements as s 400.8(1), save that the state of mind element is recklessness - maximum penalty is imprisonment for 6 months, or 30 penalty units, or both; s 400.8(3) - an offence of the same elements as s 400.8(1), save that the state of mind element is negligence - maximum penalty is 10 penalty units, but no imprisonment.

It can be seen that within Division 400 of the Code, maximum penalties cascade in accordance with the lessening value of the money or property involved and the lessening seriousness of the mental element. However, in s 400.9, the maximum penalties cascade in accordance with the lessening value of the money or property only.
The statutory intention to place importance upon the element of the value of the money or property amongst the impugned conduct of an offender, is also readily found in s 400.10. Pursuant to s 400.10, criminal responsibility for an offence against all of the above referred to sections (and others within the Division) is reduced if at or before the time of the dealing, the offender considered the value of the money or property and was under a mistaken but reasonable belief that it was of a lesser value, in which circumstances the offender would be guilty of the lesser offence against the Division applicable to dealing at that lesser sum.
That the legislative purpose to describe offences against Division 400 of the Code in terms of what the offender actually did is also made plain by ss 400.11 and 400.13; which provide that it is not an element of the offences to prove the existence of any fault element in relation to: whether an offence may be dealt with as an indictable offence, whether an offence is an indictable offence, whether an offence is a Commonwealth, foreign, state or territory indictable offence, or whether an offence is a foreign offence. Further, by s 400.12, multiple contraventions by dealing and conduct (other than a proceeds of general crime offence provision) may be prosecuted as a single charge of an offence, such that the total value of the money or other property dealt with is the element of the offence which places it among the hierarchy of seriousness of offences against the Division.

OBJECTIVE SERIOUSNESS

Consideration of the assessment of the objective seriousness of the offending includes that s 400.9(1AB)(b) of the Code provided a first route for prosecution of the offence which the Crown did pursue during the trial. That was to prove, beyond reasonable doubt, that in relation to the Offender's dealing with the money, "it is reasonable to suspect that the money or property is proceeds of indictable crime". As the Agreed Facts for sentence proposed by the parties properly acknowledge, the verdict is not consistent with the Crown having succeeded in its prosecution by that first route; but rather, by the second route, by way of the "deeming" provision s 400.9(2)(c). Therefore, the correct approach here is:

to give paramount consideration to the total sum of the cash, $3,677,275, which exceeds 3.6 times the threshold value of $1,000,000 for the offence and is 40% along the increasing range of value for offending against s 400.9(1AB);
in accordance with the fact that the Offender was not of the state of mind of actual suspicion that the money was proceeds of indictable crime; and
in accordance with recognition that in the circumstances of those 28 transactions involving very substantial sums of cash, the jury were not satisfied that the Offender did not have reasonable grounds for not suspecting that the money was derived or realised, directly or indirectly, from some form of unlawful activity.

The verdict is consistent with a lower level of moral culpability for the offence than had the verdict been consistent with the Offender possessing a state of mind of that suspicion. In this way, it is important to consider carefully what the Offender actually did (R v Olbrich (1999) 199 CLR 270; [1999] HCA 54 at [19]), which was to receive, count and otherwise handle, make book entries in regard to, carry in shopping bags, and bank, sums of cash which were extraordinary to the common experience.
Whilst conscious to avoid expressions labelling a place in the range of objective seriousness such as "middle" or "low", the objective seriousness of the offence is principally to be assessed by the element of the value of the money dealt with being in excess of 3.6 times the threshold, and the Offender's state of mind falling below actual suspicion, but in circumstances where it was not reasonable for him not to suspect the money was derived directly or indirectly from unlawful activity. In my assessment, objectively, the Offender's offending was significantly serious for offending of this type.

CONSIDERATION OF OTHER CASES - SEARCH FOR "YARDSTICKS"

Because of the newness of s 400.9(1AB), cases available for most relevant consideration historically involve sentencing for offending against s 400.9(1) of the Code. Importantly, until 17 February 2021, s 400.9(1) did not make it an element of that offence that the "crime", it was reasonable to suspect that the money or property was the proceeds of, was an "indictable crime". Additionally, the threshold value of the money or other property the subject of the s 400.9(1) offence is $100,000 or more.
Very recently in R v Lim [2023] NSWDC 238, the offender was sentenced for three offences under the Code and an offence under s 254(b)(i) Crimes Act 1900 (NSW). The offences against the Code included an offence against s 400.9(1), an offence against s 400.9(1AB), and an offence against s 400.9(1A). The s 400.9(1) offence predated the commencement of s 400.9(1AB) and involved a larger sum of money than the s 400.9(1AB) offence. A discount of 25% was allowed on account of pleas of guilty for all of the offending. The offending conduct occurred over a period of two years, much longer than in the present case, and the total money dealt with came to slightly less than $4,000,000. The offending involved multiple bank accounts, multiple mobile phones, and activity of higher objective seriousness and moral culpability than in the present case because of the closeness of the offender's involvement with the illegal importation syndicate (tobacco) from which the money derived. The offence against s 400.9(1AB) involved dealing in money totalling about $1,000,000 over a period of nearly 8 months. His Honour indicated a sentence of 1 year and 4 months imprisonment for the s 400.9(1AB) offence. The aggregate sentence was 2 years and 9 months, to be released on recognizance after 1 year and 9 months.
In Akoum v The King [2023] WASCA 102, the offender, whilst working for a car wash business in Sydney operated by a co-offender, travelled to Perth on the co-offender's instructions to receive large amounts of cash and deposit them in express deposit boxes at various banks. 51 deposits were made totalling $1,762,480. The offence was against s 400.9(1) of the Code. A 10% discount was allowed an account of the offender's plea. The appeal was allowed on parity grounds and the Court resentenced the offender for the single offence. He was a first offender and was assessed as having very favourable prospects of rehabilitation. The Court found that personal deterrence was not a matter of significance although general deterrence was an important consideration in the sentencing. There were significant subjective considerations including imprisonment in Western Australia whilst his four autistic children would reside with his wife in New South Wales. He was resentenced to 8 months imprisonment, to be released after 4 months upon giving security, without a surety, by recognizance in the sum of $5,000 and to be of good behaviour for a period of 4 months. I observe that the requirement of him as a car wash worker, to travel to Perth for the purpose of collecting the cash and depositing it in that anonymous way, as a matter of common sense, involved a reason for the offender to suspect association between the money and unlawful activity.
In Nguyen v R [2019] NSWCCA 44, the Court did not disturb the sentence at first instance by Arnott DCJ. After a 15% discount for plea of guilty, his Honour sentenced the offender to 14 months imprisonment with release after 9 months on a recognizance to be of good behaviour for the balance of the term. The offender dealt with $745,050 in cash and $800 in counterfeit notes. His Honour found the offender's overall role was more extensive than that of a mere courier. Intercepts of the offender's mobile telephone showed her to have discussed with others the upcoming monetary transaction and a corresponding monetary transaction to take place in Vietnam on the same day, and at the same time, including her having said to one of those individuals "you get in touch with that person and… that person will talk to me and once the deal is done over there and over here I'll deliver the money." When arrested, the offender told Police that she was delivering cash for a $2,000 reward but the evidence did not confirm that to be the extent of the reward. His Honour assessed the objective seriousness under s 400.9(1) to fall in the mid-range. The offender was not of good character and had an antecedent criminal history of fraud. She helped facilitate meetings for the transaction and thereby participated to some extent in an organisational role. Arnott DCJ observed "Although the offender's role on the day of the transaction assumed a courier type function by transporting the cash, as the Crown submitted, the offender's overall role was far more extensive and performed a vital task to ensure its success."
In Lai Yean Wong v R [2013] VSCA 52, the Supreme Court of Victoria, Court of Appeal, reviewed the sentence of an offender convicted on a total of nine counts, five relating to dealing with money against s 400.9(1), one of dealing with money against s 400.9(1A), and other Commonwealth and State charges including those associated with the possession of false documents and the manufacturing of fraudulent credit cards. Having arrived in Perth from Malaysia, his incoming passenger card having stated that he intended to stay for four days, the offender flew to Melbourne and took up residence. 3 months after arriving he became an unlawful non-citizen because his Visa had expired. Over a period of five months in 2011, he made 34 cash deposits with three international currency exchange companies located in Sydney and Melbourne. Each of the 34 transactions involved money reasonably suspected to be the proceeds of crime, which he deposited for the purpose of international transfer to China. The offences against s 400.9(1) involved rolled up charges as follows: (1) 5 transactions totalling $1,365,400; (2) 4 transactions totalling $801,617.90; (3) 5 transactions totalling $1,292,310; (4) 5 transactions totalling $1,458,240; and (5) 8 transactions totalling $1,379,620. The total amounted to $6,297,187.90. The offending activity included that the offender was an employee whose sole purpose of entering Australia was to commit significant criminal activity. He played a central and crucial role in the money laundering offences and was motivated by greed. A Police search of his premises found a false passport, equipment for the manufacture of counterfeit credit and debit cards, 973 completed counterfeit credit cards and thousands of incomplete and blank cards bearing banking and/or Visa and MasterCard logos. He was rewarded by way of commission of 0.5% on each exchange. Whilst those facts were the subject of other offending for which he was sentenced, the point is that the offender was actually involved in the money laundering to a significant and "crucial" extent. The offender entered early pleas of guilty. He had no antecedent criminal history. For those five offences against s 400.9(1) he was sentenced to imprisonment as follows: (1) 20 months; (2) 20 months; (3) 20 months; (4) 20 months; and (5) 20 months. The more serious offences other than those against s 400.9(1) carried maximum penalties of 10 years and the sentences for them were more significant. Applying the principle of totality, the trial judge applied accumulation and concurrence. The total sentence was more than 3 years and accordingly the offender was sentenced to a total term of imprisonment and a non-parole period. Priest JA (Tate JA and Vickery AJA agreeing) determined those five sentences for offending against s 400.9(1) to be not manifestly excessive (at [29]). But the trial judge's staged commencement dates in accordance with intended accumulation is to be borne in mind, as well as the terms of sentencing for the overall offending, when assessing the case for "yardstick" sentencing consideration.
In R v Yi-Hua Jiao [2015] NSWCCA 95, the offender was re-sentenced for a single offence against s 400.9(1). She pleaded not guilty. The total amount involved was $624,340. She had met an unknown man at the Star Casino in Sydney and after exchanging with him a five dollar banknote with a known serial number, she received a sports bag containing that sum of $624,340 in Australian currency. She deposited the money in her casino account and attempted to transfer $200,000 to a remitter's CBA bank account but the casino declined that transfer. The offender withdrew $300,000 and took the cash to the Pyrmont Branch of CBA where she was intercepted and arrested by the AFP. She cooperated in an ERISP declaring that half the money was to be sent to China. The Court assessed the objective seriousness of the offending by reference to the amount involved being six times the s 400.9(1) threshold of $100,000; that her involvement was beyond mere possession or receipt and deposit, though it was not part of an ongoing or protracted criminal enterprise; that she engaged in an element of planning; and took active steps to divert the money. Her role was assessed as more than that of a "bag person" or mere courier. The first instance sentence of fixed term imprisonment for 6 months was quashed. The Court re-sentenced the offender to imprisonment for 16 months, to be released after 12 months, on recognizance for the balance of the term. On re-sentence, the Court in R v Yi-Hua Jiao found significance in the value of the money dealt; that involvement went beyond mere possession of the money or mere receipt and deposit thereof, though it was not part of an ongoing or protracted criminal enterprise; that her offending included an element of planning, including a process of identification with co-offenders well known to be used in criminal money laundering; her taking active steps to divert the money; and there being no discount available by reference to a guilty plea. The Court said: "Having regard to the importance of general deterrence in the context of money laundering offences, a sentence of imprisonment was the only appropriate sentence in this case and a significantly longer period of imprisonment was required" than the 6 months fixed term at first instance. A sentence was imposed of 1 year and 4 months with release on recognizance after 12 months, to be of good behaviour for 4 months.
According to Judicial Information Research System Statistics ("JIRS Statistics"), in the District Court of New South Wales, 29.4% of offenders against s 400.9(1) have been sentenced by way of Intensive Correction Order ("ICO") and 23.5% by way of Recognizance Release Order pursuant to s 20(1)(b) of the Crimes Act Commonwealth. Unfortunately, none of the cases in which the Court proceeded to sentence by way of an ICO is available. By accessing Crown Facts through the court file number, which is obviously an inaccurate approach, it is apparent that the value of the money or property involved in the offending did not approach the more significant value of money dealt in the present case. So far as investigation permitted, the most significant value with which an offender dealt was in the case of R v Boasheng Lin (2021/00229473). It was $745,000. For that reason alone, it would appear that in all of the cases in which an offender was sentenced by ICO, a paramount consideration was that lesser value of money or property dealt.
In addition, I have also considered sentences on s 400.9(1) in R v Hoang [2022] NSWDC 193; R v Nguyen [2020] NSWDC 367; R v Minh Kha Le [2020] NSWDC 89; and R v Whittall [2019] NSWDC 606; R v Ngoc Doan Nguyen (2021/00288646); R v Bguyen Ban Mai Vo (2021/00288655).

DEFENCE SUBMISSION

The Defence submits that the s 17A Crimes Act Commonwealth threshold is not crossed and that the appropriate disposition for the offence is to discharge the Offender without conviction, pursuant to s 19B(d), upon him entering a recognizance to be of good behaviour for a fixed term: MFI 2 at [4]. In the alternative, in the event that the Court determines the s 17A threshold to be exceeded, then sentence by way of ICO. The Defence properly submitted (at 24) that there is no evidence that the money dealt with by the Offender was derived from trade based money-laundering or tax evasion. The Defence submission (MFI 2 at [20]) that sentencing for an offence against s 400.9(1AB), where the verdict is consistent with the "deeming" provision of s 400.9(2)(c), requires the court to be mindful of the less serious moral culpability of the offender's state of mind when assessing the range of objective seriousness, which at the high point, would involve actual suspicion that the money was derived from the proceeds of an indictable crime: MFI 2 at [20] - [21]; 24 and (ff). As the Defence submission correctly puts it, s 400.9(2)(c) facilitates proof of reasonable suspicion that the money is the proceeds of indictable crime, not proof that the offender had knowledge to that effect: MFI 2 at 24.

CONSIDERATION

That there is no evidence that the money was derived from illicit sources or processed in a money laundering or tax evasion scheme, is not of itself an absence of a feature of offending rendering the Offender less liable for penalty. To so proceed would be to employ "a type of reverse De Simoni error": R v Yi-Hua Jiao at [34]. Conviction for offending against s 400.9(1AB) by way of deemed suspicion pursuant to s 400.9(2) is part of the Commonwealth's 21st century response to antisocial and criminal conduct (R v Yi-Hua Jiao at [29]), given the well-recognised reality that frequently it will be impossible for the authorities to identify the origins of the funds or what is ultimately to be the use made of them (see the passage quoted from the judgment of Howie J in R v Ansari at [26] above).
In my opinion, in accordance with the Agreed Facts and the common acceptance that the verdict is consistent with application of the "deeming" provision s 400.9(2)(c), a view with which I completely concur; the fundamentally important principle is that the Offender should not be punished as if for offending with the state of mind of greater moral culpability, of actual suspicion. Whilst I consider all of his conduct, I must take into account that the verdict is not consistent with that more serious offending, such as if the verdict had been consistent with the Crown succeeding by way of its first route of prosecution pursuant to s 400.9(1AB) without reliance on the "deeming" provision: R v De Simoni per Gibbs CJ at p 389. S 400.9(1AB) and in particular s 400.9(2) have been included in the Code specifically so that the Crown is not required to prove, and therefore the Offender is not to be sentenced for, actual involvement in a criminal enterprise of money laundering or as if he possessed an actual state of mind appreciating unlawful activity associated with the money. Those are circumstances not consistent with the verdict.

SYNTHESIS

In my opinion, the value of the money dealt being more than 3.6 times the threshold amount for the offence, that it was so strikingly extraordinary as shown on the CCTV evidence of selected occasions of dealing, to deal 28 times over a little more than 3 months with physical Australian currency in notes of various denominations in the large sums listed in the Schedule, and the inherent seriousness of the offence requiring a sentence providing significant general deterrence; satisfies me for the purposes of s 17A Crimes Act Commonwealth, after having considered all other available sentences, that no sentence other than a sentence of imprisonment is appropriate in all the circumstances of the case. In my opinion, only a sentence to imprisonment will satisfactorily denounce the Offender's offending conduct.
Whilst the Offender is otherwise a person of good character without antecedent criminal history in Australia or in China, his offending was not of a trivial nature. In my opinion, it would be inappropriate to proceed, as the Defence submits I should, to release the Offender without conviction pursuant to s 19B Crimes Act Commonwealth immediately on recognizance or otherwise pursuant to s 20(1).
In my opinion, in the circumstances of the Offender not being entitled to a discount on account of plea, after having taken into account his provision of cooperation, his qualified remorse, his excellent prospects of rehabilitation, the low risk of him reoffending, and the special circumstances I have identified; the paramount consideration is the value of, and what he did in, the dealing at more than 3.6 times the threshold amount for the offence, whilst bearing in mind that the element of moral culpability of mind was comparatively low, and that what he did was at the level of clerical foot soldier in circumstances of handling such extraordinarily large sums of money repeatedly over approximately 3 months; a sentence to imprisonment of 1 year and 6 months is of a severity appropriate in all of the circumstances and consistent with sentencing across all jurisdictions in Australia for offending against the historically related offence under s 400.9(1) of the Code.
In my opinion, a sentence of a severity appropriate in all of the circumstances of the offence and consistent with sentencing in Australia for offences of this type, would permit, pursuant to s 19AC Crimes Act Commonwealth, release of the Offender after 6 months imprisonment on recognizance, without security, to be of good behaviour for the remaining 1 year term of his sentence.
The Defence submits in the circumstance, which has arrived, of a sentence to imprisonment of less than 2 years, that I should proceed pursuant to s 20AB Crimes Act Commonwealth and impose as an alternative to imprisonment, an Intensive Correction Order pursuant to s 7 Crimes (Sentencing Procedure) Act 1999 (NSW) ("CSP Act").
A matter not addressed by the parties is that the Offender resides in New South Wales presently, only as he is permitted to do pursuant to his 482 Visa which expires before the term of imprisonment, which I have determined, would terminate. S 69(3) CSP Act provides that the court may not make an ICO in respect of an Offender who resides, or intends to reside, in another state or territory, unless the state or territory is declared by the regulations to be an approved jurisdiction. Consistent with that requirement, an ICO is a "custodial sentence", and it would defeat the purpose of sentencing by that alternative, to order that his sentence be served by way of ICO, if he would have freedom from the order merely by returning to China or otherwise leaving this jurisdiction. Because this question was not addressed by the parties, I give no further consideration to it, other than to observe that an order of a State court, under State law, for an ICO with condition that the Offender not leave the jurisdiction for the term of his sentence would conflict with the federal grant of conditions of his Visa, in circumstances where the sentence exceeds the term of the Visa. They would be the circumstances here.
When I invited the Crown to respond to the Offender's submission that he be sentenced by way of ICO, the Crown responded only by general reference to sentencing principles for offending of this type, as exposed in the cases referred to for consistency, and that the value dealt with was more than "3.5" times the statutory threshold for the offence, indicating "increased… objective seriousness": T 15. 44 - T 16. 18; T 17. 14.
In the exercise of my general sentencing discretion, in my opinion, to order that the term of 1 year and 6 months be served by ICO would be inappropriate because it would not satisfy the significant consideration of general deterrence for this offending. Only a sentence to imprisonment will satisfactorily denounce his offending conduct. This is principally because of the large values of money in the 28 dealings and the extent of repeated dealing, as well as the total value dealt being in excess of 3.6 times the threshold amount for the offence. As these reasons have found it expressed in the case law, the subject offence is the Commonwealth's 21st century approach to attempt to address the very serious crime of money laundering, it being a crime which is difficult to detect, investigate, and prove. S 400.9(1AB), for instance, does not require the Crown to prove the underlying indictable crime from which it is suspected that the money or property was derived. As these reasons have repeatedly observed, offending against the section does not, when the Crown proceeds pursuant to s 400.9(2) "deeming" provisions, require proof that the offender actually held the suspicion. For these reasons, in my opinion, it would be inappropriate to embark on consideration of the suitability, or otherwise, of the Offender for sentence by way of ICO, such as assessment of the paramount consideration of community safety pursuant to s 66(2) CSP Act.
If I be wrong in this; then, pursuant to s 66(3) CSP Act, in my opinion, to proceed to sentence by way of an ICO would not satisfy the requirement of preventing crime by deterring other persons from committing similar offences, nor would it satisfactorily denounce the offending conduct of the Offender. I also have concern that to proceed to sentence by way of ICO, in the circumstances of this case, would fail to recognise the inherent harm to the community of the serious offending of money laundering given the 28 large value cash transactions amounting to in excess of 3.6 times the threshold amount stipulated for the offence.
The Offender has served one day of full-time deprivation of liberty following his arrest on 28 April 2022. I backdate the commencement of his sentence by 1 day accordingly.

ORDERS

I make the following orders: 1. You are convicted of the offence against s 400.9(1AB) of the Criminal Code Act 1995 (Cth), that between 17 January 2022 and 28 April 2022 you did deal with money, it being reasonable to suspect such money was proceeds of indictable crime, and at the time of the dealing, the value of the money was $1,000,000 or more. 2. You are sentenced to 1 year and 6 months imprisonment, commencing 13 December 2023. 3. You are to be released on 12 June 2024 upon you entering into a recognizance, without security, to be of good behaviour for a period expiring on 12 June 2025.

Amendments 19 December 2023 - Amended [19] and [33] by consent. 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: 19 December 2023

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