Commissioner of the Australian Federal Police v Tjongosutiono

[2018] NSWSC 48

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:	The Commissioner of the Australian Federal Police v Tjongosutiono [2018] NSWSC 48
Hearing dates:	17 March 2017; final supplementary submissions received on 8 December 2017
Decision date:	09 February 2018
Jurisdiction:	Common Law
Before:	N Adams J
Decision:	(1) The defendant’s notice of motion dated 4 November 2015 is dismissed. (2) The defendant is to pay the plaintiff’s costs of the motion.
Catchwords:	CRIME – proceeds of crime – Proceeds of Crime Act 2002 (Cth) – application to revoke restraining order – property identified as interest in bank account - account deposits made by way of money laundering scheme known as ‘cuckoo smurfing’ - whether property ceased to be proceeds of crime – whether applicant acquired property for sufficient consideration as a third party – nature of chose in action - whether it serves the interests of justice to revoke restraining order – interaction of ss 19 & 22 of the Proceeds of Crime Act 2002 (Cth)
Legislation Cited:	Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth) Criminal Code Act 1995 (Cth) Proceeds of Crime Act 2002 (Cth) Taxation Administration Act 1953 (Cth)
Cases Cited:	Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41 Australian Federal Police v Fitzroy All Pty Ltd (2015) 299 FLR 439; [2015] WASC 320 Citigroup Pty Ltd v National Australia Bank Ltd (2012) 82 NSWLR 391; [2012] NSWCA 381 Commissioner of the Australian Federal Police v Fernandez [2017] NSWSC 1197 Commissioner of the Australian Federal Police v Jieying Sun [2017] NSWSC 1476 Commissioner of the Australian Federal Police v Kalimuthu (No.3) [2017] WASC 108 Commissioner of the Australian Federal Police v Lordianto [2017] NSWSC 1196 Commissioner of the Australian Federal Police v Minh Duc Pham [2015] NSWSC 1383 Croton v The Queen (1967) 117 CLR 326; [1967] HCA 48 Director of Public Prosecutions (Cth) v Kamal (2011) 248 FLR 64; [2011] WASCA 55 Director of Public Prosecutions (Cth) v Tan [2003] NSWSC 717 George v Rockett (1990) 170 CLR 104; [1990] HCA 26 Hussien v Chong Fook Kam [1970] AC 942 International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319 ; [2009] HCA 49 N Joachimson (A Firm Name) v Swiss Bank Corporation [1921] 3 KB 110 NAB v Norman (2009) 180 FCR 243; [2009] FCAFC 152 Pereira v The Queen (1988) 35 A Crim R 382; [1988] HCA 57 Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 R v Crabbe (1985) 156 CLR 464; [1985] HCA 22 Russell v Scott (1936) 55 CLR 440; [1936] HCA 34 Studman v Commonwealth Director of Public Prosecutions [2007] 177 A Crim R 34; [2007] NSWCA 285 Sutherland Re; French Caledonia Travel Service Pty Ltd (In liq) (2003) 59 NSWLR 361; [2003] NSWSC 1008
Category:	Procedural and other rulings
Parties:	Johannes Tjongosutiono (Applicant) The Commissioner of the Australian Federal Police (Respondent)
Representation:	Counsel: Mr I Temby AO QC (Applicant) Mr A Moses SC (Respondent)     Solicitors: Avantro (Applicant) Solicitor for Proceeds of Crime Litigation Unit, Australian Federal Police (Respondent)
File Number(s):	2015/293932
Publication restriction:	Nil

Judgment

1. These interlocutory proceedings concern the operation of ss 42(5) and 330(4) of the Proceeds of CrimeAct2002 (Cth) (“the Act”), specifically, the application of those provisions to the restraint of funds held in Australian bank accounts suspected to have been involved in a particular species of money laundering known as “cuckoo smurfing”.

2. On 8 October 2015, on application by the Commissioner of the Australian Federal Police (“the Commissioner”), Davies J made a number of ex parte orders, including orders under s 19 of the Act, restraining specified property (“the property”) in the name of the applicant. The property comprised real property (a home unit) in Ryde as well as funds held in six bank accounts. Two of the accounts were with the Westpac Banking Corporation (“Westpac”), being a “Choice Offset Account” and a “Rocket Investment Loan Account”. The other four accounts were with the Commonwealth Bank of Australia (“CBA”), comprised of three “Term Deposit” accounts and a “Netbank Saver” account. The funds in each of these accounts were identified as standing to the credit of the applicant.

3. On 4 November 2015, the applicant filed a notice of motion seeking, inter alia, that the restraining orders be revoked under s 42(5) of the Act. He is the applicant in these proceedings.

4. On 17 March 2017, the applicant’s motion to set aside the restraining orders came before me for hearing. I reserved my decision at the conclusion of the hearing.

5. On 19 April 2017, the decision of Allanson J of the Supreme Court of Western Australia in Commissioner of the Australian Federal Policev Kalimuthu (No.3) [2017] WASC 108 (“Kalimuthu”) was handed down. On 1 May 2017, the parties sought and were granted leave to provide supplementary written submissions addressing the findings in Kalimuthu. Written submissions were subsequently filed by the applicant on 18 May 2017 and by the Commissioner on 8 June 2017.

6. On 7 September 2017, Simpson J, sitting as a single judge in the Common Law Division of this Court, delivered her judgments in Commissioner of the Australian Federal Police v Lordianto [2017] NSWSC 1196 (“Lordianto”) and Commissioner of the Australian Federal Police v Fernandez [2017] NSWSC 1197 (“Fernandez”). I shall refer to her Honour as Simpson J in this judgment (as her Honour describes herself in those judgments). On 21 September 2017, the parties were again granted leave to provide further supplementary written submissions addressing the findings in those decisions. Written submissions were subsequently filed by both parties on 13 October 2017.

7. On 30 October 2017, Wilson J delivered her decision in Commissioner of Police v Jieying Sun [2017] NSWSC 1476 (“Jieying Sun”). On 21 November 2017, the parties were again granted leave to provide further supplementary written submissions addressing the findings in that decision. Written submissions were subsequently filed by both parties on 8 December 2017.

8. In order to understand the relevant provisions of the Act under consideration, it is unavoidable but to extract a large number of lengthy provisions in the Act.

Relevant legislation

The Act

9. The principle objects of the Act are set out in s 5 as follows:

“(a) to deprive persons of the proceeds of offences, the instruments of offences, and benefits derived from offences, against the laws of the Commonwealth or the non-governing Territories; and

(b) to deprive persons of literary proceeds derived from the commercial exploitation of their notoriety from having committed offences; and

(ba) to deprive persons of unexplained wealth amounts that the person cannot satisfy a court were not derived from certain offences; and

(c) to punish and deter persons from breaching laws of the Commonwealth or the non-governing Territories; and

(d) to prevent the reinvestment of proceeds, instruments, benefits, literary proceeds and unexplained wealth amounts in further criminal activities; and

(da) to undermine the profitability of criminal enterprises; and

(e) to enable law enforcement authorities effectively to trace proceeds, instruments, benefits, literary proceeds and unexplained wealth amounts; and

(f) to give effect to Australia’s obligations under the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, and other international agreements relating to proceeds of crime; and

(g) to provide for confiscation orders and restraining orders made in respect of offences against the laws of the States or the self-governing Territories to be enforced in the other Territories.”

10. Chapter 2 of the Act is headed “The confiscation scheme.” Part 2-1A (ss 15A-15S) concerns freezing orders and Part 2-1 (ss 16-45A) concerns restraining orders generally. Division 1 concerns the making of restraining orders. Sections 17, 18, 20 and 20A all pertain to the restraint of property of a person who has committed an offence or is reasonably suspected of having done so. The restraining orders made by Davies J on 8 October 2015 were made under s 19 of the Act which focusses on the property rather than the suspect. I note that the Supreme Court is a court with proceeds jurisdiction and the Commissioner is a “Proceeds of Crime Authority”. Section 19(1) of the Act is, relevantly, in these terms:

“(1) A court with proceeds jurisdiction must order that:

(a) property must not be disposed of or otherwise dealt with by any person; or

(b) property must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in the order;

if:

(c) a proceeds of crime authority applies for the order; and

(d) there are reasonable grounds to suspect that the property is:

(i) the proceeds of a terrorism offence or any other indictable offence, a foreign indictable offence or an indictable offence of Commonwealth concern (whether or not the identity of the person who committed the offence is known); or

(ii) an instrument of a serious offence; and

(e) the application for the order is supported by an affidavit of an authorised officer stating that the authorised officer suspects that:

(i) in any case--the property is proceeds of the offence; or

(ii) if the offence to which the order relates is a serious offence--the property is an instrument of the offence;

and including the grounds on which the authorised officer holds the suspicion; and

(f) the court is satisfied that the authorised officer who made the affidavit holds the suspicion stated in the affidavit on reasonable grounds.”

11. Division 3 is headed “Excluding property from restraining orders.” Section 29 provides that a court may exclude a specified interest in property from a restraining order if an application is made under ss 30 or 31 and the court is satisfied “that the relevant reasons under subsection (2) or (3) for excluding the interest from the order exists”. Subs (2) is, relevantly, in these terms:

“(2) The reasons for excluding a specified interest in property from a restraining order are:

           .............

(d) for a restraining order under section 19--the interest is neither:

(i) in any case--proceeds of an indictable offence, a foreign indictable offence or an indictable offence of Commonwealth concern; nor

(ii) if an offence to which the order relates is a serious offence--an instrument of any serious offence.

Note: One of the circumstances in which property ceases to be proceeds of an offence or unlawful activity involves acquisition of the property by an innocent third party for sufficient consideration: see paragraph 330(4)(a).”

12. Division 6 (ss 41-45A) is headed “Duration of restraining orders” and includes s 42. The applicant brings this application for revocation of the restraining orders under s 42(5) of the Act. Section 42 is in these terms:

“Application to revoke a restraining order

(1) A person who was not notified of the application for a restraining order may apply to the court to revoke the order.

(1A) The application must be made:

(a) within 28 days after the person is notified of the order; or

(b) if the person applies to the court, within that period of 28 days, for an extension of the time for applying for revocation--within such longer period, not exceeding 3 months, as the court allows.

(2) The applicant must give written notice to the responsible authority and the Official Trustee of both the application and the grounds on which the revocation is sought.

(3) However, the restraining order remains in force until the court revokes the order.

(4) The responsible authority may adduce additional material to the court relating to the application to revoke the restraining order.

(5) The court may revoke the restraining order if satisfied that:

(a) there are no grounds on which to make the order at the time of considering the application to revoke the order; or

(b) it is otherwise in the interests of justice to do so.”

[emphasis added]

13. Part 2-2 of the Act concerns forfeiture orders. Division 1 (ss 47-53) includes s 49 which provides that a forfeiture order may be made following a restraining order made under s 19 of the Act. Section 49 is in these terms (I note that there is no subs (d) in s 49(1)):

“(1) A court with proceeds jurisdiction must make an order that property specified in the order is forfeited to the Commonwealth if:

(a) the responsible authority for a restraining order under section 19 that covers the property applies for an order under this subsection; and

(b) the restraining order has been in force for at least 6 months; and

(c) the court is satisfied that one or more of the following applies:

(i) the property is proceeds of one or more indictable offences;

(ii) the property is proceeds of one or more foreign indictable offences;

(iii) the property is proceeds of one or more indictable offences of Commonwealth concern;

(iv) the property is an instrument of one or more serious offences; and

(e) the court is satisfied that the authority has taken reasonable steps to identify and notify persons with an interest in the property.

(2) A finding of the court for the purposes of paragraph (1)(c):

(a) need not be based on a finding that a particular person committed any offence; and

(b) need not be based on a finding as to the commission of a particular offence, and can be based on a finding that some offence or other of a kind referred to in paragraph (1)(c) was committed.

(3) Paragraph (1)(c) does not apply if the court is satisfied that:

(a) no application has been made under Division 3 of Part 2-1 for the property to be excluded from the restraining order; or

(b) any such application that has been made has been withdrawn.

Refusal to make a forfeiture order

(4) Despite subsection (1), the court may refuse to make an order under that subsection relating to property that the court is satisfied:

(a) is an instrument of a serious offence other than a terrorism offence; and

(b) is not proceeds of an offence;

if the court is satisfied that it is not in the public interest to make the order.”

[emphasis added]

14. Part 2-2, Division 5 of the Act is headed “Reducing the effect of forfeiture orders”, Subdivision B (ss 73-76) is headed “Excluding property from a forfeiture order.” Section 73 is in these terms:

“Making exclusion orders

(1) A court that made a forfeiture order, or that is hearing, or is to hear, an application (a forfeiture application) for a forfeiture order, must make an order excluding a specified interest in property from forfeiture (an exclusion order) if:

(a) a person applies for the exclusion order; and

(b) the forfeiture order, or the forfeiture application, specifies property in which the applicant has an interest; and

(c) if the forfeiture order was (or the forfeiture order applied for would be) made under section 47 or 49--the court is satisfied that the applicant's interest in the property is neither of the following:

(i) proceeds of unlawful activity;

(ii) if an offence on which the order was (or would be) based is a serious offence--an instrument of any serious offence; and

(d) if the forfeiture order was (or the forfeiture order applied for would be) made under section 48--the court is satisfied that the applicant's interest in the property is neither proceeds nor an instrument of any of the offences to which the forfeiture order or forfeiture application relates.

(2) An exclusion order must:

(a) specify the nature, extent and value (at the time of making the order) of the interest concerned; and

(b) direct that the interest be excluded from the operation of the relevant forfeiture order; and

(c) if the interest has vested (in law or equity) in the Commonwealth under this Part and is yet to be disposed of--direct the Commonwealth to transfer the interest to the applicant; and

(d) if the interest has vested (in law or equity) in the Commonwealth under this Part and has been disposed of--direct the Commonwealth to pay the applicant an amount equal to the value specified under paragraph (a).”

15. Subdivision C of Part 2-2, Division 5 of the Act provides for the making of compensation orders in certain circumstances. Section 77(1) of the Act is in these terms:

“Making Compensation Orders

(1) A court that made a forfeiture order, or that is hearing, or is to hear, an application for a forfeiture order, must make an order under subsection (2) (a compensation order) if:

(a) a person (the applicant) has applied for a compensation order; and

(b) the court is satisfied that the applicant has an interest in property specified in the forfeiture order or in the application for the forfeiture order; and

(c) the court is satisfied that a proportion of the value of the applicant's interest was not derived or realised, directly or indirectly, from the commission of any offence; and

(d) the court is satisfied that the applicant's interest is not an instrument of any offence; and

(e) in the case of a court that is hearing or is to hear an application for a forfeiture order--the court makes the forfeiture order.”

         [emphasis added]

16. Section 180 of the Act provides:

“Examination orders relating to restraining orders

(1) If a restraining order is in force, the court that made the restraining order, or any other court that could have made the restraining order, may make an order (an examination order) for the examination of any person, including:

(a) a person whose property is, or a person who has or claims an interest in property that is, the subject of the restraining order; or

(b) a person who is a suspect in relation to the restraining order; or

(c) the spouse or de facto partner of a person referred to in paragraph (a) or (b);

about the affairs of a person referred to in paragraph (a), (b) or (c).

(2) The examination order ceases to have effect if the *restraining order to which it relates ceases to have effect.”

17. Section 317 of the Act provides:

“Onus and standard of proof

(1) The applicant in any proceedings under this Act bears the onus of proving the matters necessary to establish the grounds for making the order applied for.

(2) Subject to sections 52 and 118, any question of fact to be decided by a court on an application under this Act is to be decided on the balance of probabilities.”

18. Chapter 6 of the Act is headed “Interpreting this Act.” Part 6-1 is headed “Meaning of some important concepts.” Division 1 (ss 329-330) concerns “Proceeds and instrument of an offence”, Division 2 (ss 331-334) concerns “Convictions and related concepts” and Division 3 (ss 335 -337B) is headed “Other concepts” and contains further definitions. Part 6-2 (s 338) is headed “Dictionary” and provides for various definitions including of “property”.

19. Section 329 provides:

“Meaning of proceeds and instrument

(1) Property is proceeds of an offence if:

(a) it is wholly derived or realised, whether directly or indirectly, from the commission of the offence; or

(b) it is partly derived or realised, whether directly or indirectly, from the commission of the offence;

whether the property is situated within or outside Australia.

(2) Property is an instrument of an offence if:

(a) the property is used in, or in connection with, the commission of an offence; or

(b) the property is intended to be used in, or in connection with, the commission of an offence;

whether the property is situated within or outside Australia.

(3) Property can be proceeds of an offence or an instrument of an offence even if no person has been convicted of the offence.

(4) Proceeds or an instrument of an unlawful activity means proceeds or an instrument of the offence constituted by the act or omission that constitutes the unlawful activity.”

20. Section 330 of the Act provides for the circumstances in which property becomes, remains and ceases to be proceeds or an instrument of an offence. The applicant relies upon s 330(4)(a) of the Act which provides for one circumstances when property ceases to be “proceeds of an offence” or an “instrument of an offence.” Section 330 is in these terms:

“(1) Property becomes proceeds of an offence if it is:

(a) wholly or partly derived or realised from a disposal or other dealing with proceeds of the offence; or

(b) wholly or partly acquired using proceeds of the offence;

including because of a previous application of this section.

(2) Property becomes an instrument of an offence if it is:

(a) wholly or partly derived or realised from the disposal or other dealing with an instrument of the offence; or

(b) wholly or partly acquired using an instrument of the offence;

including because of a previous application of this section.

(3) Property remains proceeds of an offence or an instrument of an offence even if:

(a) it is credited to an account; or

(b) it is disposed of or otherwise dealt with.

(4) Property only ceases to be proceeds of an offence or an instrument of an offence:

(a) if it is acquired by a third party for sufficient consideration without the third party knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds of an offence or an instrument of an offence (as the case requires);

…”

(s 330(4)(b)–(g) are summarised below at [115])

[emphasis added]

21. Section 336 of the Act provides:

“A reference to a person having derived proceeds, a benefit, literary proceeds or wealth includes a reference to:

(a) the person; or

(b) another person at the request or direction of the first person;

having derived the proceeds, benefit, literary proceeds or wealth directly or indirectly.”

22. Section 338 of the Act provides definitions for a number of relevant terms as follows:

““exclusion order” means an order made under subsection 73(1).

…

"interest", in relation to property or a thing, means:

(a) a legal or equitable estate or interest in the property or thing; or

(b) a right, power or privilege in connection with the property or thing;

whether present or future and whether vested or contingent

…

"property" means real or personal property of every description, whether situated in Australia or elsewhere and whether tangible or intangible, and includes an interest in any such real or personal property.

…

“Sufficient consideration”: an acquisition or disposal of property is for sufficient consideration if it is for a consideration that is sufficient and that reflects the value of the property, having regard solely to commercial considerations.

…

“tainted property” means:

(a) proceeds of an indictable offence, a foreign indictable offence or an indictable offence of Commonwealth concern; or

(b) an instrument of an indictable offence.”

23. I note that although “exclusion order” is defined as orders under s 73, an exclusion order can also be sought from a restraining order under s 29 of the Act.

Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth)

24. One of the relevant offences the Commissioner relies upon to assert that the applicant’s property is the proceeds of an offence (or the instrument of a serious offence) is s 142 of the Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth) (“AML Act”). This offence was described by senior counsel for the Commissioner as an offence of “structuring.”

25. Section 43 of the AML Act requires any “reporting entity” (which includes bank - see ss 5-6 of the AML Act) to report “threshold transactions.” A “threshold transaction is defined in s 5 of the Act as, relevantly, “a transaction involving the transfer of physical currency, where the total amount of physical currency transferred is not less than $10,000”. Thus, any transfer of $10,000 or more is a “reportable transaction”, whereas any transaction in an amount less than $10,000 is a “non-reportable transaction” (see s 5). Section 43 of the AML Act is in these terms:

“Reports of threshold transactions

Scope

(1) This section applies to a reporting entity if:

(a) the reporting entity commences to provide, or provides, a designated service to a customer; and

(b) the provision of the service involves a threshold transaction.

Report

(2) The reporting entity must, within 10 business days after the day on which the transaction takes place, give the AUSTRAC CEO a report of the transaction.

(3) A report under subsection (2) must:

(a) be in the approved form; and

(b) contain such information relating to the transaction as is specified in the AML/CTF Rules.

Note 1: For additional rules about reports, see section 244.

Note 2: Section 49 deals with the provision of further information, and the production of documents, by the reporting entity.

Civil penalty

(4) Subsection (2) is a civil penalty provision.”

26. The offence of “structuring”, found in s 142(1) of the AML Act, is as follows:

“142 Conducting transactions so as to avoid reporting requirements relating to threshold transactions

(1) A person (the first person) commits an offence if:

(a) the first person is, or causes another person to become, a party to 2 or more non‑reportable transactions; and

(b) having regard to:

(i) the manner and form in which the transactions were conducted, including the matters to which subsection (3) applies; and

(ii) any explanation made by the first person as to the manner or form in which the transactions were conducted;

it would be reasonable to conclude that the first person conducted, or caused the transactions to be conducted, in that manner or form for the sole or dominant purpose of ensuring, or attempting to ensure, that the money or property involved in the transactions was transferred in a manner and form that would not give rise to a threshold transaction that would have been required to have been reported under section 43.

Penalty: Imprisonment for 5 years or 300 penalty units, or both.”

27. The Commissioner also relied upon s 400.9(1) of the Criminal Code Act1995 (Cth) (“Criminal Code”) which provides for an offence of dealing with money reasonably suspected of being proceeds of crime with a value at the time of dealing of $100,000 or more.

The Orders made by Davies J

28. On 8 October 2015, the Commissioner sought leave to file in court a summons seeking a number of orders, including forfeiture orders, in relation to the applicant’s property. The summons was heard before Davies J on an ex parte basis and a number of orders were made by his Honour on that day, including restraining orders under s 19 of the Act and an examination order under s 180 of the Act. The restraining orders were in these terms:

“3. Pursuant to section 19 of the Act, the property specified in Schedule One below must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in these orders. 4. Pursuant to section 19 of the Act, the property specified in Schedule Two below must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in these orders. 5. Notwithstanding order 3 above, Westpac Banking Corporation may deal with the property listed in Schedule One in accordance with registered mortgage AI133027.

SCHEDULE ONE

1. Real property located xxxxx Ryde NSW 2112, being Lot xx in Strata Plan xxxxx, held in the name of Johannes Tjongosutiono.

2. Funds held in or available for withdrawal, including any re-draw, from Westpac Banking Corporation Rocket Investment Loan Account number xxx-xxx xxxxxx held in the name of Johannes Tjongosutiono.

3. Funds standing to the credit of Westpac Banking Corporation Choice Offset Account number xxx-xxx xxxxxx (also referred to as the Deposit Account) in the name of Johannes Tjongosutiono.

SCHEDULE TWO

1. Funds standing to the credit of Commonwealth Bank of Australia Term Deposit Account number 2000 xxxxxxxx in the name of Johannes Tjongosutiono.

2. Funds standing to the credit of Commonwealth Bank of Australia Term Deposit Account number 2000 xxxxxxxx in the name of Johannes Tjongosutiono.

3. Funds standing to the credit of Commonwealth Bank of Australia Term Deposit Account number 2000 xxxxxxxx in the name of Johannes Tjongosutiono.

4. Funds standing to the credit of Commonwealth Bank of Australia Netbank Saver account 2000 xxxxxxxx in the name of Johannes Tjongosutiono.”

29. In making these orders, Davies J had regard to an affidavit of Glyn Roberts, sworn on 8 October 2015. Mr Roberts is an investigator with the Australian Federal Police (“AFP”). He is an authorised officer within the meaning of the Act. He deposed that the applicant’s property was suspected of being wholly or partly the proceeds of an offence and/or instruments of a serious offence. The relevant offences are s 400.9(1) of the Criminal Code and s 142 of the AML Act. These are both “serious offences” as defined in the Dictionary of the Act: s 338.

30. The applicant subsequently elected to exercise his right under s 42 of the Act to seek revocation of the orders. That section only applies if the restraint proceedings have been heard ex parte. Any such application must be commenced within 28 days of the orders being made. The applicant filed a notice of motion on 4 November 2015 seeking, inter alia, that the restraining orders be revoked. There was no issue taken that the restraining orders were made ex parte and that the applicant brought these revocation proceedings within the statutory time limit set out in s 42(1A) of the Act.

31. At the time of the hearing of the revocation application before me, the applicant had not yet been examined under s 180 of the Act.

The s 42(5) application

32. At the hearing of this application, Mr Temby QC appeared on behalf of the applicant and Mr Moses SC appeared on behalf of the Commissioner.

33. The applicant relied upon the affidavit of Mr Roberts which was before Davies J. He also relied upon a letter sent by the NSW Crime Commission to the AFP on 7 July 2015 which was before Davies J. Additional material comprised an affidavit of Johannes Tjongosutiono sworn on 19 March 2016 with the exhibit “JT-1”, the affidavit of Joshua Wong, sworn on 22 March 2016, and the affidavit of Dolly Chandra, sworn on 22 March 2016. The applicant was not required for cross-examination.

34. The Commissioner relied on the exhibit “GER-1” to the affidavit of Mr Roberts sworn on 8 October 2015 and the affidavit of Scott Matthews affirmed on 30 June 2016, along with exhibit “SM-1”. Scott Matthews is the AFP officer who has taken over conduct of the matter from Mr Roberts. The material in his affidavit is substantially the same as in Mr Roberts’ affidavit and adds little to that which was before Davies J. In addition, the Commissioner relied upon: the affidavit of Stephen Pao, sworn on 2 May 2016, who is employed by the CBA; the affidavit of Maree Elizabeth Johnston, affirmed on 23 May 2016, who is employed by Westpac; the affidavit of Selvije Lika, affirmed on 4 May 2016, who is employed by the Australia and New Zealand Banking Group (“ANZ”); and the affidavit of Kate Patricia Natoli, sworn on 27 May 2016, who is employed by the National Australia Bank (“NAB”). These banking staff all annexed various bank accounts and their evidence was not in dispute.

35. Although a great deal of material was placed before the court comprising hundreds of pages of banking records, most of the evidence was not in dispute. The applicant did not contend that Mr Roberts did not have reasonable grounds to suspect that the property was either the proceeds of an offence or an instrument of a serious offence and thus did not dispute his evidence. As for the affidavit of the applicant, the situation was somewhat different.

36. The Commissioner did not require the applicant for cross-examination nor object to any part of his affidavit. The applicant submitted that the applicant’s affidavit evidence should thus be accepted in its entirety. The Commissioner, on the other hand, submitted that there was no need for the Commissioner to cross-examine the applicant because of the nature of the application. He submitted that the court was only being asked, at this stage of the proceedings, to determine whether or not there is any basis for the initial restraining orders to be made. The applicant was yet to be examined under s 180 of the Act and he would no doubt also be required for cross-examination at any exclusion from restraint application and/or any final forfeiture hearing.

37. I will consider the significance of the fact that the applicant did not give evidence on this application later in this judgment. Given that his evidence was not directly challenged in cross-examination, I propose at this stage to summarise it along with the other unchallenged evidence placed before me.

Factual Background

38. The applicant is a 52 year old Indonesian citizen. He is married with two daughters and has worked as a senior stockbroker for the same company in Indonesia since December 2003. His salary is made up of a base salary, trade commissions and bonus payments. He describes his base salary as an allowance to cover basic living costs and transportation. It is commonly referred to as “Petrol Money” and amounted to approximately $1,530.00 per month in 2015. The bulk of his income comes from trade commissions that are paid on a monthly basis. His bonus payments are paid once a year to cover Indonesian holidays. These payments are made into separate accounts he holds with a major bank in Indonesia.

39. The applicant’s bank records were annexed to his affidavit. They are consistent with his assertions that all of his income is derived from his work as a stockbroker. The Commissioner did not produce any evidence suggesting otherwise.

40. Prior to being a stockbroker, the applicant worked in the travel industry. In 1988, he met Andy Widjaja (“Andy”) when they were working together for a tour company. In 2003 Andy told the applicant that he had registered a money-changer business in Indonesia known as “Wisman”. At that time, Andy offered his services to the applicant but the applicant had no need for his services at that point.

41. The applicant states that in 2009 he commenced investing in real estate in Indonesia and overseas. At that time, he contacted a number of banks to inquire about their rates and charges for money transfers overseas and discovered that, in addition to their exchange rate being between 40-100 points higher than the official rate of the Indonesian Central Bank, they would charge additional fees. He decided to contact Andy who confirmed an offer of a lower rate and no charging of any fees. He decided to proceed with him.

42. The applicant states that money-changers are popular in Indonesia because they offer a lower rate on currency exchange than the commercial banks and it would be common not to charge any additional fees.

43. The applicant describes how the first transaction he made with Andy proceeded without any issues and from then on he always used Wisman when transferring money out of Indonesia. It is to be noted that, although the applicant states that the first time he used Wisman was in 2009, the banking records before me show that the first time the applicant used the services of Wisman to transfer any funds to Australia was in 2013.

44. The applicant states that in 2012, his oldest daughter commenced tertiary education in Australia. His second daughter proposed to follow suit. The applicant states that he decided to purchase an apartment in Sydney for his daughters.

45. In 2013, the applicant decided to purchase a home unit in Ryde for $972,500. He states that he paid for this property from the remittance of moneys sent from Indonesia to Australia through Andy as well as a loan of $490,000 provided by Westpac. In 2013, the applicant opened two accounts with Westpac. He states that this was done specifically for the purpose of purchasing real estate in Sydney. The applicant eventually had four accounts with Westpac: an “eSaver Account”; a “Choice Offset Account”; a “Rocket Investment Loan Account”; and a “Reward Saver Account.” The relevant bank records show that the first deposit into any of the applicant’s Westpac accounts was on 8 October 2013 and the last on 19 March 2015.

46. The applicant described his dealings with Andy at Wisman when seeking to transfer funds to Australia as follows. He would first telephone Wisman and place an order over the telephone. During that initial conversation they would agree on an exchange rate. The applicant would then deposit the money into Wisman’s account. The individual transaction limit is $50,000 which means that for transfers in excess of $50,000 he would have to make a number of deposits. Once the transfer was made he would contact Andy to confirm the transfer and advise of the account into which the moneys were to be deposited.

47. After the applicant would nominate which account he wanted the funds deposited into, Andy would generally tell him that the funds would be in his account within three to seven days. Transfers of $50,000 or more would take up to seven days. The applicant would later check the “home screen” of his Westpac accounts online after the time suggested by Andy and would confirm the balance and the receipt of funds from Wisman. He would subsequently receive a receipt from Wisman. Copies of these receipts were annexed to his affidavit.

48. At around this time, the AFP set up Strike Force Sylvia to investigate money laundering activities and offences of persons linked to or associated with various organised crime syndicates in Australia.

49. In 2014, Strike Force Sylvia identified Pui Man Sandy Wong as a person involved in money laundering. On 9 September 2014 a search warrant was executed at Ms Wong’s residential property at Hurlstone Park. At that time a number of items were seized, including bank deposit books in the name of Harbour World Trading Pty Ltd (“Harbour World Trading”). Ms Wong was arrested on 23 September 2014 and charged. Her initial charges were replaced with Commonwealth offences brought contrary to s 142 of the AML Act and ss 400.4 and 400.9 of the Criminal Code.

50. Subsequent Investigations of Harbour World Trading deposit books revealed that structured deposits were made into its business bank accounts held at the CBA, NAB and ANZ. Those bank accounts were suspected of being used for money laundering activities.

51. A review of the debit transactions recorded in a Harbour World Trading CBA Account showed that transfers of $70,000 and $28,300 were made on 9 and 10 September 2014 respectively with a reference “Direct Debit Harbour World Tra Commbiz Payment”. The applicant’s bank statements for his Westpac eSaver Account for the period 20 September 2013 to 20 May 2015 showed that on 9 and 11 September 2014 the amounts of $70,000 and $28,300 respectively were credited into his eSaver Account with a reference “DEPOSIT HARBOUR WORLD TRA Payment”. That is, the amounts debited from the Harbour World Trading business account correspond with the funds credited into the applicant’s eSaver Account at Westpac.

52. This discovery led police to examine the applicant’s Westpac bank accounts in more detail. It revealed that his bank accounts had received a number of “structured” deposits, namely, multiple deposits under the $10,000 reportable threshold. The applicant’s bank statements relating to his eSaver Account for the period 20 September 2013 to 20 May 2015 reveal that the account received $2,396,961 in 215 transactions in that period. Specific instances of structuring activities in the amounts of less than $10,000 were identified in 148 of those transactions. All of the deposits were made at various bank branches around Sydney and some were also made at branches in Victoria.

53. By way of example it is noted that, in the four day period from 8 October 2013 to 11 October 2013, the eSaver Account received a total of 36 deposits, all under $10,000, totalling $300,000, and in the period from 17 October 2013 to 24 October 2013, the account received a total of 35 deposits, all under $10,000, at various bank branches in Sydney, totalling $303,500.

54. On 28 and 31 October 2013, nine transfers totalling $724,900 were made from the eSaver Account into the Choice Offset Account. On 30 October 2013, $428,358.75 was withdrawn from the Offset Account with the reference “withdrawal for settlement”. This withdrawal occurred on the same date as the settlement of the Ryde property held in the applicant’s name. The Commissioner asserts that the Ryde property was acquired from the funds which were deposited into the eSaver Account and later transferred to the Offset Account.

38. The applicant states that he subsequently entered contracts to purchase two off-the plan properties in Sydney: one at Wynyard and the other at Green Square.   

39. On 2 December 2014, $1 million was transferred from the eSaver Account to the Reward Saver Account.

40. In May 2015 the applicant received a letter from Westpac stating that it was no longer prepared to provide him with services in respect of his eSaver Account and his Reward Saver Account and that he only had 30 days to transfer the funds to another institution. The applicant states that he was shocked by this and could not understand why they would close his accounts without notice.

41. The applicant states that he arranged for his daughter to attend the Top Ryde Westpac branch but the staff there did not have any information. It was conveyed that he should contact head office directly. He “googled” the number for the Westpac hotline but they were likewise unable to assist. He then flew to Sydney. He states that he made enquiries at the Westpac branch at Top Ryde and that they could not offer any explanation. He then went to the CBA Branch in Martin Place and transferred the funds from his Westpac account into five CBA accounts.

42. The bank records show that on 20 May 2015, an amount of $2,100,063.86 was withdrawn from the Reward Saver Account with Wespac and deposited into the Choice Offset Account. On that same day $2,194,255.16 was withdrawn from the Choice Offset Account and later deposited in separate amounts into five CBA accounts. CBA records show that as at 5 October 2015, account balances in the applicant’s five accounts stood at $2,055,692.77.

43. Westpac records show that, as at 11 August 2015, the status of the applicant’s Westpac bank accounts was that his eSaver Account and Reward Saver Account were closed and his Choice Offset Account and Investment Loan Account were in credit of $10,000 each as at 29 June 2015.

44. Less than three months later, the applicant’s bank accounts and the Ryde property were restrained by Davies J. In doing so, his Honour relied on Mr Roberts’ affidavit.

45. Mr Roberts’ evidence is that he suspected that the manner and form of the funds being deposited into the applicant’s eSaver Account with Westpac were structured and indicative of money laundering. His suspicion that the applicant’s Ryde property and related Westpac accounts are wholly or partly the proceeds and/or an instrument of an indictable structuring offence is based on a number of factors. These include the 148 deposits of less than $10,000 each between 20 September 2013 and 20 May 2015 totalling $1,140,000 and the fact that many of the deposits were made at different branches in NSW and Victoria, either on the same day or within a short time. Mr Roberts had regard to the form and manner in which the deposits were made which is indicative of a design to avoid reporting requirements. It was noted that the applicant visited Australia on 14 occasions between 7 January 2000 and 22 August 2015 and on each occasion did not declare he had in possession cash in excess of $10,000. The funds deposited are grossly disproportionate to what the applicant had declared.

46. Mr Roberts also based his suspicion on the fact that at least some of the money that was deposited into the applicant’s eSaver Account came from Harbour World Trading, an entity suspected to be a vehicle for money laundering activities, and the fact that Ms Wong was charged with offences contrary to s 142 of the AML Act and ss 400.4 and 400.4 of the Criminal Code. He relied on the fact that the money from the structured deposits was subsequently transferred into his other accounts.

47. With regard to the Ryde property, Mr Roberts noted that the applicant’s Investment Loan Account relates to it and that the amount of $450,000 of the structured deposits were transferred into the applicant’s Investment Loan Account. Overall, Mr Roberts stated that the form of the structured deposits, the subsequent money transfers between the applicant’s Westpac accounts and the withdrawal of the structured moneys and their deposit into his CBA is indicative of money laundering activities.

48. The applicant states that prior to his property being restrained he had no idea that structured deposits were being made into his bank accounts. He states that he never looked at his bank statements beyond the first page so did not notice that the funds were being deposited in so many small amounts. He explained that he would check his Westpac accounts online only after the time that Andy suggested. He did not see any point in checking prior to that time. He states that when he did check his account he would only check the “home screen” which displayed the balance. He states that at no stage was he aware that funds were being deposited in an incremental way. He states that he was only concerned to know that the money was being transferred. His home screen does not display any details of the transactions.

49. He states that on 18 March 2016, he visited the Bank Indonesia website which sets out a list of the authorised money exchange dealers and Wisman was listed there at #269 as an authorised money exchange dealer.

50. He states that he regrets having invested in Australia and that he had planned to make significant business investments in Australia and seek to migrate here under the Business Innovation and Investment Visa which requires a minimum capital investment of $5 million. He now doubts that he will do so   .

51. The affidavit of Dolly Chandra, paralegal, annexes screenshots showing exchange rates offered by CIMB Niaga, a large Indonesian Bank, and the Indonesian Central Bank. She states that she randomly selected six money exchanging companies in Indonesia and enquired about their exchange rates. That evidence shows that three of the six money exchangers charged fees less than both CIMB Niaga and the Indonesian Central Bank. The affidavit of Joshua Wong, solicitor, was to a similar effect, setting out the exchange rates on transactions and fees incurred. The Commissioner did not take issue with any of this evidence.

52. A letter dated 7 July 2015 from the Director of Criminal Investigations at the NSW Crime Commission was relied upon by the applicant. It indicates that the NSW Crime Commission had examined the applicant and elected not to commence proceedings against him because it concluded that, having examined him, it is possible that the proceeds of crime in his account were innocently received by him. The letter states:

“Mr Tjongosutiono does not appear to have committed any crime although it is possible that he has been the recipient of proceeds of crime into his Australian bank account, however, at present there appears to be no evidence of what sort of crime.”

70. It is to be noted that there were a number of evidentiary vacuums in the material before me. There was no evidence from Andy as to what he did with the funds given to him by the applicant. Presumably they never left Indonesia. Besides the two deposits from Harbour Trading into the applicant’s eSaver Account described above at [51], it is not known who else made the numerous deposits into his accounts. It is not known where those funds came from. The evidence goes no higher that establishing that some of the deposits were made by Harbour Travel and that many of the deposits were structured so as to avoid reporting obligations.

“Cuckoo smurfing”

71. During the hearing of this application, the particular species of money laundering in this matter was described by senior counsel for the Commissioner as “cuckoo smurfing”. No evidence was placed before the court to explain this process but evidence was before the court in both Kalimuthu and Lordianto explaining this methodology. Although that evidence was not before this court, in none of the parties’ extensive supplementary submissions on, inter alia, those decisions, was any issue taken with that evidence.

72. In Lordianto, Simpson J summarised the evidence of a former officer of the AFP, Mr Murray Smith, concerning this process, at [53] as follows:

“Mr Smith gave an account of a practice he said is known as “cuckoo smurfing”. The practice, as described by him, is used as a means of “laundering” money that is the proceeds of crime. It involves the following steps:

‘a. An international ‘Controller’ meets with an Australian crime syndicate head and agrees to launder a specific sum that is the proceeds of crime. The Controller receives a percentage of the criminal funds and is responsible for paying other money laundering syndicate members.

b. The Controller instructs a complicit ‘Coordinator’, who is the proprietor of a money remittance business usually located in Singapore, Malaysia or Indonesia, to withhold customer remittances to Australia in an amount equalling the sum that the Controller has agreed to launder.

c. The Coordinator instructs his employees, known as ‘Collectors’ in Australia to collect the criminal cash from the Australian syndicate. The Coordinator asks for the serial number of an Australian $5 note held by the Collector, and passes the number to the Controller.

d. The Controller supplies the criminal syndicate head with the telephone number of the Collector and the serial number of the bank note held by him. The criminal syndicate head calls the Collector and arranges to meet to hand over the criminal cash.

e. The meeting is conducted, the Collector provides the $5 note as identification and the criminal cash is handed to the Collector.

f. The Collector confirms receipt of the criminal cash. The Coordinator provides the Collector with a list of bank account details and cash amounts originally obtained when customers requested the transfer of funds to Australia.

g. The Collector attends a series of banks, making deposits of the criminal cash under the AUSTRAC reporting threshold (although this is not always the case) until all of the requested remittances have been satisfied.

Once the Coordinator has been informed that all of his customers’ remittances have been satisfied he can release the money originally supplied to him by the remitting customers to the criminal syndicate.’”

73. Similarly, in Kalimuthu, Allanson J summarised the evidence of Mr Smith, who also gave evidence in that matter concerning the “colourful if not particularly descriptive name of 'cuckoo smurfing'” at [71] of that decision.

74. Although the origin of the expression “cuckoo smurfing” was not explained to me at the hearing, “smurfing” (no doubt derived from the fictional animated character, the “Smurfs”) is a colloquial term for structuring. The phrase “cuckoo smurfing” presumably is derived from the fact that the cuckoo bird lays its eggs in other bird’s nests.

75. On the evidence before me taken at its highest, I accept that it is open to make a finding that the applicant’s Westpac eSaver Account was used by unknown persons to launder cash which was presumably the proceeds of criminal activity in Australia. This could only have been achieved with the cooperation, either directly or indirectly, of staff at Wisman in Indonesia.

The applicant’s submissions

76. The applicant relied upon three separate arguments in support of his application that the restraining orders be revoked. He primarily relied upon s 42(5)(a) of the Act which provides that, if a restraining order is made ex parte, a court may later revoke it if satisfied that there were “no grounds” to make the order at the time it was made. The applicant relied upon s 330(4)(a) of the Act which provides that property ceases to be proceeds or an instrument of an offence if it is acquired for sufficient consideration without the purchaser knowing it is tainted “and in circumstances that would not arouse a reasonable suspicion” that the property was the proceeds of an offence or an instrument of an offence. The applicant’s second argument was that it was in the interests of justice to revoke the orders: s 42(5)(b) of the Act. His third argument was that the order should be revoked because s 22(1) of the Act had not been complied with.

77. In addition to the oral submissions made by counsel for the applicant at the hearing of this application, the applicant relied upon four sets of written submissions dated 8 February, 8 June, 13 October and 8 December 2017.

78. As for the application of s 330(4)(a) of the Act, it was submitted that the applicant was a third party in relation to the funds in his Westpac account and he had the right to call on the repayment of those funds at will. The applicant acquired an interest in those funds for a sufficient consideration because Wisman, an authorised and licensed money-changer in Indonesia, earned commission on the money remittance as well as profit on the exchange rate given to the applicant.

79. It was not disputed that there was at least one intermediate transaction or agreement between those involved in the money laundering that occurred between the time the applicant deposited the funds with Wisman and the time at which the funds were paid into the applicant’s Westpac account. Despite this, it was submitted that the circumstances in which he acquired the interest in those funds were not such that they would arouse suspicion because the applicant was not aware that the transfers of funds into his Westpac account were structured. The applicant had internet access to his Westpac account, however did not check the account beyond the ‘balance’ screen. One had to go to a further ‘transaction’ page that contained details of the transactions in order to identify how the deposits were made, and he never did that. It was submitted that once the funds were paid into the account they ceased to be proceeds or an instrument of crime.

80. It was submitted that money-changers are widely used in Indonesia for both currency conversion and money transfers, both domestically and internationally. They are popular because they offer attractive rates and reduced fees. The applicant used a legitimate money exchange company.

81. Addressing the “interests of justice” ground, it was submitted that the primary purpose of the Act is directed against those actively engaged in criminal activity and that its application against blameless individuals would be contrary to that purpose and would result in manifest injustice and unfairness. A number of submissions were advanced to show the absence of criminal complicity on the part of the applicant: the prior transfers with Wisman were without incident; money-changers offer competitive rates and are commonplace in Asia; there was nothing to put him on notice that he was taking any risk by using Wisman services; the purpose of the transfers was to invest in Australia and provide his daughters with accommodation and he had no way of knowing that he would become involved in a possible breach of Australian law or that there was a possibility of moneys being restrained or forfeited. It was thus submitted that it is in the interests of justice that the restraining order be revoked.

82. Counsel for the applicant conceded that it is possible that the applicant’s legitimately earned money got mixed with the funds that could not be properly traced but that the applicant was not aware of the existence of any activity of the intermediaries or the nature of their transactions.

83. In supplementary submissions following the decision in Kalimuthu, counsel for the applicant submitted that this court should follow that decision as it was factually similar. Following the decisions of Simpson J in Fernandez and Lordianto, it was submitted on behalf of the applicant that Fernandez should not be followed but the result in Lordianto ought to be followed. Following the decision of Wilson J in Jieying Sun, it was submitted that her Honour should be followed at [130] to the extent that her Honour did not follow Simpson J’s decisions but that otherwise Jieying Sun had no application.

84. I consider the applicant’s submissions regarding these four recent decisions in more detail below.

The Commissioner’s submissions

85. On behalf of the Commissioner it was submitted that the threshold to be satisfied in an application under s 42(5) of the Act is different from and substantially higher than an application for an exclusion order or any application that a final forfeiture order not be made. It was submitted that, in those circumstances, there was no need to cross-examine the applicant in order to determine whether there was any basis at all for the initial restraining order. An examination order has been made and in due course, the applicant will be examined. Should the applicant make an application for exclusion from any restraining order the court “must not hear” such an application until the Commissioner has had a reasonable opportunity to conduct examinations in relation to such an application: see s 32 of the Act.

86. Senior counsel for the Commissioner submitted that, with respect to the present application, there is no need to consider what the applicant must or might have known as the examination under the Act has not been conducted yet. Despite this, the fact that the applicant has not been examined does not present a bar to the making of this revocation application.

87. It was submitted that, even though the law enforcement agency has not identified an offence that the applicant has been engaged in, there is no need to identify that an offence was committed by an individual because the restraining orders are directed to the property. He relied upon the decision of Beech-Jones J in Commissioner of the Australian Federal Police v Minh Duc Pham [2015] NSWSC 1383 (“AFP v Pham”) which involved “cuckoo smurfing” practices, as authority for the proposition that the focus is on the property and that the court should not be looking at the individual’s guilt or innocence.

88. Senior counsel for the Commissioner relied upon the applicant’s concession that, even though the money he gave to the money-changer in Indonesia was lawful, some of the moneys that flowed into his bank account may have been mixed with the proceeds crime. It was submitted that this concession is “the start and finish of this case”.

89. As for the application of s 330(4)(a) of the Act, the Commissioner submitted that it cannot be said that the applicant is a “third party” because the structured deposits were paid directly into his bank account and the applicant accepted that some of the funds in his bank account must have been proceeds of crime at some stage. Consequently, his accounts hold proceeds of crime. Even if the applicant was a third party, it was submitted that no consideration was given for the property that ended up in his account. There is no evidence to support that the moneys given to the money-remitter in Indonesia are the moneys being deposited into his bank account. It was submitted that all of the money in the applicant’s account is proceeds of crime because it was deposited by way of structured deposits.

90. With respect to the question of whether the circumstances would arouse a reasonable suspicion, the Commissioner submitted that the test is an objective one, however, that there is no need to go to that point given the fact that the funds in the applicant’s account are proceeds of crime and that he is not a third party because he received proceeds of crime.

91. With respect to the “interests of justice” ground, the Commissioner submitted that the construction of s 49(5)(b) is to be looked at by reference to the Act as a whole and that the operation of that subsection cannot override the objects of the Act as a whole. He relied upon the decision of Martin CJ in Director of Public Prosecutions (Cth) v Kamal (2011) 248 FLR 64; [2011] WASCA 55. It was submitted that the orders should not be revoked under s 42(5)(b) of the Act at a time before any examination of the applicant under s 180 of the Act, an exclusion application or a final forfeiture hearing. That is, it cannot be in the interests of justice to release moneys to an individual where there is a prima facie case that the moneys in the account are the proceeds of crime.

214. First, s 49(4) of the Act only applies when the property is the instrument of a serious offence (other than a terrorist offence) rather than the proceeds of an offence, whereas the power conferred on the court under s 42(5)(b) applies in both circumstances. Thus, the discretion in s 49(4) applies in more limited circumstances. I am satisfied that there are reasonable grounds to suspect the funds standing to the credit of the applicant’s accounts are the proceeds of an indictable offence.

215. Second, s 49(4) of the Act provides the court with the discretion before making final forfeiture orders at a time after which the owner of the property will invariably have already been examined. Simpson J had before her a great deal of evidence in Fernandez, including explanations by the applicant who was examined by the Registrar. That statutory context is to be contrasted with the question of what is in the “interests of justice” in an application to revoke a restraining order under s 42(5) of the Act at this early stage of the proceedings.

216. It is to be accepted that the fact that the applicant was not criminally complicit in the offending is a relevant matter but not conclusive. On the other hand, it was submitted on behalf of the Commissioner that the scheme of the legislation recognises that the provisions have the potential to apply to innocent third-parties and accordingly provide for affirmative steps to be available as a safeguard for such persons.

217. The applicant submitted that it is one thing to target those engaged in criminal activity and forfeit the proceeds of their offending but the deployment of the Act against an individual who is blameless cannot be a purpose which advances the objects of the Act. Rather, it was submitted that to do so results in manifest injustice and unfairness. I have had regard to this submission and to the objects of the Act set out in s 5. I have also had regard to the purpose of the Act as explained by the then Attorney General, the Honourable Daryl Williams MP, in the Second Reading speech of the Bill on 13 March 2002. The applicant relied upon the following passage from that speech:

“This money is derived at the expense of the rest of the community. It is earned through the harm, suffering, and human misery of others. It is used to finance future criminal activity including terrorism. It is tax free. Criminals have no legal or moral entitlement to the proceeds of their crimes.”

220. The difficulty with reliance upon statements such as this is that it is not possible to exclude the possibility that the funds deposited into the applicant’s account were indeed earned through the “harm, suffering and… misery” of others. The fact that the applicant might not have been the direct cause of that harm does not detract from this circumstance. If, as has been contended, the applicant has been the innocent victim of a cuckoo smurfing operation via an authorised money-changer, then his recourse is with the company who has taken his money and not transferred it to the applicant’s account as it was contracted to do.

221. I have given consideration to the submission made on behalf of the applicant that the legislation was not intended to take the funds of innocent victims. The difficulty with its application in the present matter, however, is that the Commissioner does not seek to take the applicant’s money; that money presumably remains in Indonesia and was diverted by either Andy or someone else at Wisman. It was that unknown person who took the applicant’s money. Submitting that it is unfair that the applicant may ultimately forfeit those funds is simply to submit that it is unfair that some unscrupulous money lender in Indonesia took his money from him and instead the proceeds of crime were deposited into his account. His grievance is against the person who took his money and unwittingly involved him in a money laundering operation. In making this observation I have not overlooked the fact that money is fungible. I simply wish to highlight the fact, as was conceded by the applicant’s counsel at the hearing of this matter, that the funds deposited into the applicant’s account may well be the proceeds of criminal activity.

222. I have had regard to the fact that if I do not revoke the restraining orders under s 42(5)(b) of the Act, the applicant might not have the benefit of any further judicial discretion in these proceedings unless the judge hearing the Commissioner’s final forfeiture application is of the view, consistent with Simpson J, that the funds standing in his bank account are not the proceeds of a crime but merely the instrument of a serious crime. It is somewhat curious that the forfeiture scheme in the Act provides for a discretion to revoke an otherwise properly made restraining order over property suspected to the proceeds of crime near the commencement of the proceedings, prior to any examination of the property owner, but no corresponding power to do so at the time of the final hearing by which time the court will invariably have a much clearer picture of the true circumstances of the background to the matter. Despite this, I am concerned with whether the interests of justice require that on the material before me otherwise properly made restraining orders should be revoked.

223. In applying the test in s 42(5)(b), I have had regard to all of the matters put before me including the matters I have set out above at [199]-[203]. Even taking the applicant’s evidence at its highest, some aspects of it raise questions as to his awareness of what was happening with his bank accounts. Just because he was not cross-examined does not mean that I am bound to accept all of his evidence if, on its face, it raises unanswered questions.

224. The legislation aimed at curtailing money laundering is harsh. If the applicant’s contentions are ultimately accepted and his property is forfeited nonetheless, the legislation will have acted harshly in his case. The difficulty is that, at this stage of the proceedings, in what is effectively a strike out application, I am not satisfied on the material before me that it is in the interests of justice to revoke the orders which were otherwise properly made.

ORDERS

225. I make the following orders

1. The defendant’s notice of motion dated 4 November 2015 is dismissed.

2. The defendant is to pay the plaintiff’s costs of the motion.

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Amendments

23 February 2018 - Amendments

23 February 2018

[29] fifth sentence - “s 143 of the AML Act” amended to “s 142 of the AML Act”

[33] third sentence – “before Davies J” deleted

[217] second sentence –“cross-examined before her” amended to “examined by the Registrar”

Decision last updated: 23 February 2018