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Court of Criminal Appeal 30 May 2002

R v. NARAYANAN & ANOR.

[2002] NSWCCA 200

Fraud & dishonesty
CRIMINAL LAW CASH TRANSACTION STRUCTURING REPORTABLE CASH TRANSACTIONS

Citation: R v Narayanan & Anor [2002] NSWCCA 200
Court: NSW Court of Criminal Appeal
Date: 30 May 2002
Judge(s): Hodgson JA, Barr J, Greg James J

Background

The appellants were a currency exchange company (SEF) and its CEO and director (Narayanan). SEF was a "cash dealer" for the purposes of the Financial Transactions Reports Act 1988 (Cth) (the FTR Act), operating multiple offices in Sydney including a head office at Centrepoint Tower. The company's business included currency exchange and the sale of travellers cheques.

The FTR Act requires cash dealers to report "significant cash transactions" involving the transfer of $10,000 or more. It also creates a separate offence of "structuring": deliberately breaking up transactions into smaller amounts so that no single transaction meets the reporting threshold. Both appellants faced charges under these two limbs of the Act following a 16-day trial in the District Court at Sydney.

The jury returned guilty verdicts on a subset of the charges, including structuring offences (s 31(1)) and failure to report (s 28(1)). The appellants challenged their convictions and sentences before the Court of Criminal Appeal.

  • Whether the same events could simultaneously constitute a "significant cash transaction" (attracting a reporting obligation under s 7) and several "non-reportable cash transactions" (grounding a structuring charge under s 31(1)).
  • Whether the convictions on counts 39 and 40 (the structuring charges based on those particular transactions) were legally sustainable.
  • Whether the sentences imposed for the remaining convictions were manifestly excessive or otherwise erroneous, having regard to the appellant Narayanan's personal circumstances and medical condition.

Decision

The Court allowed the appeal against convictions on counts 39 and 40. The reasoning centred on a fundamental definitional tension within the FTR Act: a "non-reportable cash transaction" is defined as one that is not a significant cash transaction. A structuring offence under s 31(1) requires the person to have been a party to two or more "non-reportable cash transactions." Where the transactions in question actually constituted a significant cash transaction, they could not simultaneously be characterised as non-reportable. The convictions on those counts were therefore quashed.

The appeals against the remaining convictions were dismissed. The Court found no error in the jury's verdicts on the other structuring charges (counts 51 to 54) and the failure-to-report charges (counts 57 and 58).

On sentence, the Court granted leave to appeal in respect of the surviving counts but dismissed the sentence appeals. Hodgson JA described the FTR Act offences as "very serious," noting the importance of monitoring large cash transactions to combat money laundering and tax evasion, and observing that breaches are extremely difficult to detect, making general deterrence a significant sentencing consideration. Despite detailed evidence of Narayanan's deteriorating health, depression, and family difficulties, the Court found the sentences imposed by the trial judge appropriate.

Orders Made

  • Appeal against conviction on counts 39 and 40 allowed; those convictions quashed.
  • Appeal against all remaining convictions dismissed.
  • Leave to appeal against sentences on counts 51 to 54 and 57 and 58 granted, but appeals dismissed.

Key Takeaways

  • A structuring offence under s 31(1) of the FTR Act requires the existence of two or more "non-reportable cash transactions." Where the underlying transactions themselves constitute a significant cash transaction (at or above $10,000), they fall outside the definition of "non-reportable" and cannot ground a structuring charge.
  • The Court of Criminal Appeal confirmed that the same events cannot simultaneously amount to a significant cash transaction and serve as the basis for several non-reportable cash transactions for the purpose of a structuring offence.
  • Structuring offences under the FTR Act attract strong general deterrence considerations at sentencing, given the difficulty of detection and the public interest in combating money laundering and tax evasion.
  • Significant personal hardship, including serious health concerns and family disruption, did not warrant a reduction in sentence where the offending was assessed as objectively serious.
  • Under the FTR Act, the distinct definitions of "cash transaction," "significant cash transaction," and "non-reportable cash transaction" carry real operative weight, and the boundaries between them can be determinative of whether a charge is legally sustainable.

Legislation and Cases Referenced

Legislation:
- Financial Transactions Reports Act 1988 (Cth), ss 3, 7, 28, 31
- Crimes Act 1914 (Cth), s 7

Cases:
- Beckwith v The Queen (1976) 135 CLR 569
- Leask v The Commonwealth (1996) 187 CLR 579
- Maric v R (1978) 52 ALJR 631
- Question of Law Reserved (No 2) of 1998 (1998) 70 SASR 502
- R v Hannes [2000] NSWCCA 503
- R v Leask [1999] NSWCCA 33
- R v Stewart (2001) 52 NSWLR 301