AI-generated summaries. Not legal advice. Always verify against the official judgment on NSW Caselaw.
← All decisions
District Court 14 December 2023

R v Zhang (No 2)

[2023] NSWDC 570

Fraud & dishonesty
CRIME SENTENCE MONEY LAUNDERING AMOUNT DEALT A PRIMARY CONSIDERATION CONSISTENCY OF SENTENCING IMPORTANCE OF GENERAL DETERRENCE

Citation: R v Zhang (No 2) [2023] NSWDC 570
Court: District Court of New South Wales
Date: 14 December 2023
Judge: Montgomery DCJ

Background

The offender, a Chinese national working in Australia on a temporary skills visa, was employed by a daigou business (a cross-border retail operation selling Australian products to Chinese consumers) as a warehouse operations bookkeeper. Between January and April 2022, he handled 28 large cash deposits totalling $3,677,275 into his employer's Commonwealth Bank account, acting on the instructions of the company's sole director.

A jury found the offender guilty of a single count of dealing with money where it was reasonable to suspect that money was the proceeds of indictable crime, contrary to s 400.9(1AB) of the Criminal Code Act 1995 (Cth). The threshold for the offence is $1,000,000; the amount dealt with was more than 3.6 times that figure. The offender was arrested on 28 April 2022 while carrying a further $143,295 in a shopping bag en route to make another deposit.

The sentencing hearing addressed the appropriate penalty for an offence where the prosecution did not need to prove the identity of any underlying crime, and where the offender's culpability was assessed against the backdrop of him acting throughout under his employer's direction.

  • How to place the s 400.9(1AB) offence within the broader statutory scheme of money laundering offences under the Criminal Code Act 1995 (Cth), given its relatively modest maximum penalty of four years imprisonment.
  • What weight to give to the amount of money dealt with as a primary sentencing consideration.
  • Whether an Intensive Correction Order (ICO) was an appropriate sentencing option, having regard to the nature of the offence and the requirements of general deterrence and denunciation.
  • How to assess the offender's moral culpability where the jury's verdict rested on the statutory "deeming" provision (gross disproportion between the amount dealt with and the offender's income), rather than proof of actual subjective suspicion.
  • How to balance the offender's mitigating circumstances (acting under direction, cooperation with police, visa vulnerability) against the objective seriousness of the conduct.

Decision

Montgomery DCJ approached sentencing by first locating the offence within the Criminal Code's tiered money laundering scheme, which ranges from provisions requiring proof of knowledge or belief (carrying higher maximum penalties) down to s 400.9's "reasonable suspicion" level. The section 400.9(1AB) variant, applying to amounts of $1,000,000 or more, carries a maximum of four years and sits near the lower end of the scheme in terms of fault element, though not in terms of financial scale.

The court gave significant weight to the quantum of money involved. The $3,677,275 dealt with substantially exceeded the statutory threshold and was processed through 28 structured transactions, deliberately kept under $150,000 each to avoid triggering bank manager scrutiny. The structured nature of the deposits, the maintenance of a cash register, and the instructions to alter record-keeping mid-way through the offending period were all relevant to the objective seriousness of the conduct.

The court rejected the suitability of an Intensive Correction Order. Montgomery DCJ reasoned that the offence, being one deliberately constructed by Parliament to address the difficulty of detecting and proving money laundering without proof of an underlying crime, demands that general deterrence be given substantial weight. Even accepting that the offender acted under direction and did not personally profit beyond his salary, an ICO would not adequately denounce the conduct or deter others. The court also noted that the sheer volume of transactions and the amounts involved represented serious harm to the community.

The offender received some mitigation for his cooperation with the Australian Federal Police (including providing his phone passcode and contact details for his employer, who had since returned to China), his vulnerability as a visa holder, and the fact that he acted throughout under direction. However, these factors did not displace the need for a full-time custodial sentence.

Orders Made

  • The offender was convicted of the offence against s 400.9(1AB) of the Criminal Code Act 1995 (Cth), for dealing with money reasonably suspected of being proceeds of indictable crime, with the value of money at the time of dealing being $1,000,000 or more.
  • Sentence of 1 year and 6 months imprisonment, commencing 13 December 2023.
  • Release on 12 June 2024, upon entering into a recognizance without security to be of good behaviour for a period expiring 12 June 2025.
  • Sentence backdated by one day to account for pre-sentence custody following arrest on 28 April 2022.

Key Takeaways

  • Under s 400.9(2)(c) of the Criminal Code Act 1995 (Cth), it is taken to be reasonable to suspect that money is proceeds of indictable crime where the value is grossly out of proportion to the defendant's income and expenditure. No proof of the underlying crime is required for a conviction on this basis.
  • The District Court held that the amount of money dealt with is a primary consideration when sentencing for s 400.9(1AB) offences, and that an amount more than three times the statutory threshold materially increases objective seriousness.
  • General deterrence carries substantial weight in sentencing for money laundering offences under s 400.9, reflecting Parliament's deliberate choice to create an offence that does not require proof of actual suspicion or an underlying indictable crime.
  • Acting under the direction of an employer does not displace culpability for money laundering under s 400.9(1AB), though it may be considered as a mitigating factor in the overall sentencing exercise.
  • An Intensive Correction Order was found to be inappropriate where the conduct involved 28 structured, large-value cash transactions deliberately designed to avoid bank reporting thresholds, notwithstanding the offender's personal mitigation.

Legislation and Cases Referenced

Legislation:
- Criminal Code Act 1995 (Cth), ss 400.3, 400.4, 400.5, 400.8, 400.9 (including ss 400.9(1AB), 400.9(2)(c), 400.9(4), 400.9(5)), 400.10–400.13
- Crimes Act 1914 (Cth), ss 16A, 17A, 19B, 19AC, 20, 20AB
- Crimes (Sentencing Procedure) Act 1999 (NSW), ss 7, 66(2), 66(3), 69(3)
- Crimes Act 1900 (NSW), s 254
- Evidence Act 1995 (NSW), s 191

Cases:
- Hili v The Queen (2010) 242 CLR 520; [2010] HCA 45
- R v Ansari (2007) 70 NSWLR 89; [2007] NSWCCA 204
- Milne v R (2012) 259 FLR 42; [2012] NSWCCA 24
- R v Yi-Hua Jiao [2015] NSWCCA 95
- Nguyen v R [2019] NSWCCA 44
- Akoum v The King [2023] WASCA 102
- R v De Simoni (1981) 147 CLR 383; [1981] HCA 31
- R v Olbrich (1999) 199 CLR 270; [1999] HCA 54
- Lai Yean Wong v R [2013] VSCA 52
- R v Milne (No 1) (2010) 260 FLR 166; [2010] NSWSC 932
- R v Hoang [2022] NSWDC 193
- R v Lim [2023] NSWDC 238
- R v Minh Kha Le [2020] NSWDC 89
- R v Nguyen [2020] NSWDC 367
- R v Whittall [2019] NSWDC 606