Commissioner of the Australian Federal Police v Xin

[2023] NSWSC 599

Supreme Court

New South Wales

Medium Neutral Citation:

Commissioner of the Australian Federal Police v Xin; & Ors [2023] NSWSC 599

Hearing dates:

19 May 2023

Date of orders:

19 May 2023

Decision date:

19 May 2023

Jurisdiction:

Common Law

Before:

Campbell J

Decision:

Orders made in accordance with the short minutes of order including restraining orders and ancillary relief

Catchwords:

CRIME — proceeds of crime — application for restraining order — risk of dissipation of assets — custody and control orders — delayed notification of orders — limited suppression and non-publication orders

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Court Suppression and Non-publication Orders Act 2010 (NSW)

Proceeds of Crime Act 2002 (Cth)

Category:

Procedural rulings

Parties:

The Commissioner of the Australian Federal Police (Applicant)
Steven Hoitou Xin (First Respondent)
Yi Ming Wang (Second Respondent)

Representation:

Counsel:
Mr K Anderson with Ms W Liu (Applicant)
Ex parte (Respondents)

Solicitors:
The Australian Federal Police – Criminal Assets Litigation (applicant)

File Number(s):

2023/32255

Publication restriction:

Initial Non-publication order and suppression order in relation to the notification period lifted

EX TEMPORE JUDGMENT (REVISED)

CLOSED COURT

1. HIS HONOUR: I am dealing with an application for a restraining order and other ancillary relief under the provisions of the Proceeds of Crime Act 2002 (Cth).

2. The proceedings in which this application is made are complex and have something of a history in the Common Law Division.

3. Extensive orders were made by Hamill J on 31 January 2023 involving what I infer on the evidence led before me is a massive international money-laundering scheme which has been given the title “Xin MLO”. On the evidence arising out of the investigation by the Australian Federal Police, the operation of that illegal enterprise involved a turnover of something like $240 million and involved many participants connected and disparate.

4. In any event, his Honour was content to make those orders in accordance with the provisions of s 18 of the Act. Further orders were made by Sweeney J in April.

5. Earlier today, in response to an application in this regard by the Commissioner for the Australian Federal Police, who is represented by Mr Anderson and Ms Liu of counsel, I closed the Court and proceeded ex parte.

6. I should say the entitlement of the Commissioner as a proceeds authority to proceed ex parte is really established by s 26(4) of the Act, although in this case, as Mr Anderson has properly pointed out, a number of the defendants, including the two defendants concerned with the present application, have filed appearances and are legally represented in the proceedings following the making of the initial orders at the end of January.

7. The order closing the Court was made under the authority of s 319A of the Act and s 71 of the Civil Procedure Act 2005 (NSW). Having said that, Mr Anderson, in the written submissions prepared by him and his learned junior, pointed out that where these proceedings have moved into an inter partes phase, it may be that a question might arise about the appropriateness of closing the Court especially in an ex parte application. In paragraphs 22 to 24 of the written submissions counsel have set out the arguments for and against (a) proceeding ex parte, and (b) conducting the proceedings in a closed Court.

8. I was satisfied, on balance, that notwithstanding the fact that the first and second defendants, Mr Xin and Ms Wang, are represented, the matters deposed to by Federal Agent Mathews in his fifth affidavit affirmed on 7 May 2023 were such that it was in the public interest that the application should be entertained in the absence of the public on an ex parte basis. Essentially, I was persuaded that the complexity of the process of transferring cryptocurrency, which is the subject of the application, was such that had any person connected with this extensive syndicate received information that the proceedings for the further order were before the Court, it may have allowed an opportunity for persons involved, some of whom remain at large, to move the cryptocurrency beyond the reach of the plaintiff.

9. In this regard, without casting any aspersions one way or another, I note that Ms Wang has recently been granted bail and is at conditional liberty in the community.

10. For those reasons, I made the orders sought.

11. It is important to briefly refer to the evidence, which I accept, as to why it is necessary to make this further application for a restraining order, to dispel any mild suggestion that could be made that there is some abuse of process involved in terms of multiple applications in this regard. I have already referred to the complexity and multitude of the criminal operation.

12. After Hamill J made orders on 31 January, certain persons, including the persons affected by this order, Mr Xin and Ms Wang, were arrested and search warrants were executed, including at the premises of Mr Xin and Ms Wang, who are married. The execution of the search warrant resulted, on the evidence before me, in the seizure of the massive amount of documents, electronic devices and, accordingly, data. It took quite some time to work through all of that evidence, and doubtless it is still being worked through.

13. One of the documents seized was a piece of paper containing handwriting which has been referred to, for ease, as the “Xin/Amy Ledger”. I interpolate “Amy” is the given name used by Ms Wang. That writing turned out to be what is referred to as a “seed phrase”. Here it has been referred to as the “Xin/Amy seed phrase”. It is effectively a 24 word private password necessary to gain access to an amount of cryptocurrency held online in what is referred to as “a wallet”.

14. It was only in early May, according to the fifth Mathews’ affidavit, at para 31, that the significance of the writing was connected with the same seed phrase being discovered on seized electronic devices, including a hard drive seized at the premises and phones, which investigators have been able to individually associate with both Mr Xin, on the one hand, and Ms Wang, on the other. Using the seed phrase to access the wallet, it was discovered that there were two quantities of cryptocurrency issued by separate organisations in varying amounts. In respect of the second of them, as summarised at paragraph 44 of the written submissions, there were 400,000 units of a particular currency. That explains the need for this further application.

15. The grounds which must be established by the plaintiff for a restraining order are set out, for present purposes, in s 18 of the Act. If those grounds are established or conditions met, the Court is required to make the orders sought with no discretion to refuse them. Those grounds are set out in paragraphs (c) to (f) of subparagraph (1) of s 18.

16. On the evidence before me, there is no question that the Commissioner is a proceeds of crime authority. I will return to s 18(1)(d). That is a requirement that there are reasonable grounds to suspect that a person has committed a serious offence.

17. I am satisfied that there is an affidavit from an authorised officer, being the fifth affidavit of Federal Agent Mathews, that satisfies all of the requirements of s 18(3) and that includes a statement by Federal Agent Mathews as to his relevant suspicions and the grounds upon which he holds them. I am satisfied the fourth affidavit satisfies that criterion.   

18. It seems to me, in considering the matters that Federal Agent Mathews sets out, that given the circumstances of the seizure of the ledger and the seizure of the hard drive and telephones, that there are grounds to suspect that the crypto currency is either the property of Mr Xin and Ms Wang or property under their effective control, given that the evidence demonstrates that they had access to the relevant crypto currency wallet by means of those various devices and that the circumstances of the seizure of those devices, as set out by the Federal Agent, as summarised in the written submissions, are such that there is strong evidence of a connection between the devices and Mr Xin and Ms Wang. I have reviewed the material in the affidavit and I have also considered the findings made by Hamill J on 31 January 2023 and I am well satisfied that there are reasonable grounds to suspect that Mr Xin and Ms Wang have committed a serious offence as defined, for the purpose of the Act, and that definition relates to an offence carrying a maximum penalty of a term of imprisonment of greater than three years. Given the nature of the money laundering operations, there are, I accept, reasonable grounds to suspect that each of them has committed an offence under Div 400 of the Criminal Code of the Commonwealth.

19. For those reasons, I am required to make the restraining orders sought. I will do so in due course.

20. Other relief is also sought and I will deal with them not in any particular order, but an order is sought pursuant to the provisions of s 38 of the Act, that the official trustee should take custody and control of the crypto currency the subject of the application. I am not of the view that this order requires any great exposition from me. Clearly, the value of that asset, that property, ought to be preserved and controlled in the public interest by an official of the Commonwealth.

21. I am also satisfied, given what Federal Agent Mathews says about the complexity of transferring crypto currency from one wallet to another, which can take quite some time, that the Commissioner and his Crypto Currency Capabilities Team, ought to have power under s 39 to do everything necessary to affect that transfer and any fee that involves should be a charge on the property.

22. I am also of the view that it is appropriate to make limited suppression and non-publication orders under ss 7 and 8 of the Court Suppression and Non-publication Orders Act 2010 (NSW). When I say “limited”, I mean for the limited period set out in prayer 4 of the motion, that it should be for seven days or the period necessary to affect the transfer in accordance with the earlier matters I have referred to, whichever is the earlier, and that that order should apply throughout the Commonwealth.

23. It seems to me, for the reasons I have already given, that the risk of notice being given to persons who may have some interest in the criminal activities, including, as I have said, Ms Wang, who is at liberty, is this could stymie the attempts of the AFP to secure the restraint that I am imposing in the public interest. The period of seven days or thereabouts seems to me to be modest enough and I have already explained why there should be no notification to the parties during that period of time.

24. Accordingly, I make orders under ss 33(3)(b) and 39 permitting delayed notification to Mr Xin and Ms Wang of the orders I am making.

25. As I have said, Sweeney J made other orders on 21 April and those orders were also delayed. Given the advent of this application, those orders should be extended lest notification of her Honour’s orders alerts, as I say, interested persons in the criminal enterprise, by deduction, to this operation and these orders, before the property is securely under the control of the official trustee.

26. For those reasons, I will make orders in accordance with the short minutes of order handed up by Mr Anderson, signed by me and dated today. The seal of the Court may be affixed to those orders and they may be entered forthwith.

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Decision last updated: 05 June 2023