Citation: Application of the Commissioner of the Australian Federal Police (No 2) [2016] NSWSC 277
Court: Supreme Court of New South Wales
Date: 17 March 2016
Judge(s): Schmidt J
Background
The Commissioner of the Australian Federal Police applied for a forfeiture order under the Proceeds of Crime Act 2002 (Cth) in relation to approximately $77,000 held in custody by the Official Trustee in Bankruptcy. Those funds had been subject to restraining orders made by Button J in August 2015, following an ASIC investigation into suspicious trading in 13 securities listed on the Australian Securities Exchange.
The investigation revealed that certain online share trading accounts had been hacked and used without their owners' authorisation to conduct trades. The profits from those unauthorised trades, totalling around $113,036.50, were linked to suspected offences involving cybercrime, market manipulation, and money laundering. Only a portion of those profits remained with Morgan Stanley Australia Securities Limited at the time the restraining orders were made, and it was that remaining amount that became the subject of the forfeiture application.
A Danish entity, Saxo Bank A/S, had previously sought orders to exclude its claimed interest in the restrained funds, but that application was later withdrawn. A Danish national, identified by Danish financial regulators as the person operating the suspect account, had been notified of the proceedings but did not appear or respond.
Legal Issues
- Whether the conditions required by s 49 of the Proceeds of Crime Act 2002 (Cth) for a mandatory forfeiture order were satisfied
- Whether the restrained funds constituted proceeds of relevant criminal offending
- Whether the public interest supported making the forfeiture order
- Whether any interested parties had a legitimate, unresolved claim to the restrained property
Decision
Schmidt J delivered brief reasons explaining why forfeiture orders were made the previous day. Section 49 of the Proceeds of Crime Act 2002 (Cth) provides that a court must make a forfeiture order if the specified statutory conditions are met, leaving no residual discretion to refuse once those conditions are satisfied.
The court was satisfied on affidavit evidence from two AFP officers that the procedural requirements had been met. The application and supporting materials had been properly served on all interested parties: Saxo Bank A/S, Morgan Stanley Australia Securities Limited, and the individual identified as operating the suspect account. None of those parties appeared to oppose the application.
Because Saxo Bank's earlier exclusion application had been withdrawn, the requirement under s 49(1)(c) did not apply. The court was satisfied that the restrained funds represented proceeds of the relevant offending, that the restraining order had been in force for more than six months, and that the Commissioner was a "responsible authority" as defined in the Act. Victims of the unauthorised trades had already had steps taken to restore their pre-hack position and were not identified as having any ongoing interest in the restrained property.
Satisfied that all statutory conditions were met and that no basis existed to refuse the order, Schmidt J made the forfeiture orders in the terms sought by the Commissioner.
Orders Made
• An order that restrained property be forfeited to the Commonwealth under section 49 of the Act
Key Takeaways
- Under s 49 of the Proceeds of Crime Act 2002 (Cth), the court must make a forfeiture order once the specified conditions are established. There is no residual discretion to refuse.
- A previously filed application by a third party to exclude its interest from a restraining order, once withdrawn, removed the need to satisfy the requirement in s 49(1)(c) before forfeiture could proceed.
- Affidavit evidence from AFP officers can be sufficient to establish the statutory preconditions for forfeiture, including service on interested parties, the proceeds character of the restrained funds, and the public interest in making the order.
- Where victims of the underlying offending have already been restored to their pre-offence position, they are not treated as having an ongoing interest in the restrained property for the purposes of a forfeiture application.
- The decision confirms the procedural pathway from restraining order to forfeiture under the Proceeds of Crime Act 2002 (Cth) in cases involving cybercrime and market manipulation offences.
Legislation and Cases Referenced
Legislation:
- Proceeds of Crime Act 2002 (Cth), ss 29, 31, 49
- Cybercrime Act 2001 (Cth)
- Corporations Act 2001 (Cth)
- Criminal Code Act 1995 (Cth), s 400.9 of the Schedule
Cases:
- Application of the Commissioner of the Australian Federal Police [2015] NSWSC 1137 (Button J, restraining orders)