Our Principal, Dan Rogers, is an expert in money laundering. Today he drew upon this expertise and presented at the Legalwise seminar, White Collar Crime: The Civil and Criminal Risks. From the outset Dan noted that anti-money laundering obligations apply to a wide variety of professions, not only lawyers.
Traditionally, most professions have not really been too concerned with money laundering, or at least they’ve treated money laundering with some level of apathy. However, considerable attention has been cast upon the issue in recent years, especially in light of a spate of recent prosecutions.
Dan began the presentation by noting what constitutes money laundering. Using the definition contained in the Commonwealth Criminal Code as a framework, it is usually seen to mean ‘dealing with’ money in a way that involves:
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- – receiving, possessing, concealing or disposing of money or other property; or
- – importing money or other property into, or exporting money or other property from, Australia; and
- – receiving, possessing and concealing money which is the proceeds of crime, or could become an instrument of crime, in relation to an indictable offence.
In addition to the Commonwealth legislation, each State and Territory has their own similar legislative provisions that create such an offence in one way, shape or form.
This expansive definition reflects the fact that modern clients and their methods of money laundering have become increasingly sophisticated. For example, instead of dumping large bags of cash on your desk, clients may create complicated commercial structures, through which Australian legal practitioners may be used to:
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- – conceal proceeds of crime
- – obscure ultimate ownership through complex layers and legal entity structures
- – avoid tax
- – work around regulatory controls
- – provide a veneer of legitimacy to criminal activity
- – create distance between criminal entities and their illicit income or wealth
- – avoid detection and confiscation of assets
- – hinder law enforcement investigations.
Most importantly, the majority of jurisdictions recognise that money laundering includes both knowingly dealing with dirty money, as well as recklessly and negligently dealing with such money. For illustration, ‘reckless’ is defined in the legislation as when there could be a ‘substantial risk’ that something could occur and when, considering the circumstances at the time, taking that significant risk is unjustifiable.
In addition to the various criminal offences, the Anti-Money Laundering/Counter-Terrorism Financing Act 2006 (Cth) provides for national framework of anti-money laundering legislation. This Act aims to prevent money laundering and the financing of terrorism by imposing a number of obligations on the financial sector, gambling sector, remittance services, bullion dealers and other professionals or businesses that provide particular ‘designated services’. Designated services include, but are not limited to, opening a bank account, obtaining a loan, buying shares or gambling at casinos, race tracks or gaming machines. It should be noted, that real estate agents, lawyers and accountants are excluded from the scheme.
The legislation places number of regulatory obligations on reporting entities, including customer and beneficial ownership due diligence, record keeping and transactions reporting. There are also provisions that allows the government agency that oversees the Act to authorise officials of Commonwealth, State or Territory agencies to access a broader range of information gathered under the Act for the purpose of performing their ordinary duties and functions.
Dan then traversed a number of recent cases that involved the prosecution of professionals for money laundering offences. One such case was John Anile, a previously Melbourne based solicitor who recently pleaded guilty to one count of money laundering. His offence arose out of a 1994 land deal in which Anile, then a practising solicitor, was given cash from a friend for the purchasing and development of a block of land. For his role he was sentenced to 3 years imprisonment. In handing down the sentence, Judge Michael O’Connell stated, ‘As a legal practitioner, particularly one with some criminal law experience, you should have well understood how money laundering enables and encourages serious criminal activity … In other words, you should have known better.’
Lastly, Dan outlined a handful of tips all professionals should use to prevent themselves or their staff from being caught off guard in this space. There were:
- Get to know your client;
- Develop an anti-money laundering internal policy framework within your team;
- Complete anti-money laundering compliance education regularly;
- Be constantly suspicious; and
- When in doubt, get out.