Most people who face money laundering allegations did not set out to commit a criminal offence. However, others knew exactly what they were doing. Others accepted payments, moved money, or dealt with property without asking enough questions, and found themselves caught up in a serious criminal investigation as a result.
Whatever the circumstances, the consequences are the same. Money laundering is among the most serious federal offences in Australia, and courts treat it as a very serious crime. AUSTRAC, the Australian Transaction Reports and Analysis Centre and the Australian Federal Police have extensive powers to freeze assets, compel the production of financial records, and build cases over months or years before charges are ever laid. By the time you hear from investigators, they often already know a great deal.
If you are under investigation or have been charged, getting expert legal advice as early as possible is not just important; it is urgent. This fact sheet explains the legal framework, the types of offences, how investigations work, what defences may be available, and what to do next.
Key Takeaways
- Money laundering offences are established under Division 400 of the Criminal Code Act 1995 (Cth) and carry penalties ranging from significant fines to life imprisonment.
- The prosecution does not need to establish the exact nature of the underlying crime, only that the money or property was derived from serious criminal activity.
- Charges can arise even where you did not know the precise source of funds, if you were reckless or suspected a criminal origin.
- AUSTRAC is the primary financial intelligence regulator. Suspicious Matter Reports and Threshold Transaction Reports can trigger referrals to law enforcement.
- Under the Proceeds of Crime Act 2002 (Cth), assets can be frozen before any criminal conviction is obtained.
- O’Brien Criminal & Civil Solicitors have extensive experience defending white-collar and federal criminal matters, including money laundering charges.
Act Immediately If You Are
- Under investigation by the Australian Federal Police or AUSTRAC
- Facing money laundering charges under the Criminal Code Act 1995 (Cth) or the Anti-Money Laundering and Counter-Terrorism Financing Act 2006
- Subject to a freezing or restraining order over your assets
- A business facing compliance action or a referral to law enforcement
- Unsure whether financial transactions you have been involved in may be at risk
What Is Money Laundering?
Money laundering under Australian law refers to dealing with money or property that is derived from, or used in connection with, serious crime. Division 400 of the Criminal Code Act 1995 (Cth), a key piece of Commonwealth legislation, creates offences relating to both proceeds of crime and instruments of crime.
A person “deals with” money or property when they receive, possess, conceal or dispose of it, import it into Australia, export it from Australia, or engage in a banking transaction relating to it. The process of moving illicit funds through the financial system, often through shell companies or complex money trails, is what investigators look for when building money laundering cases.
The underlying crime that generates the proceeds is called the “predicate offence.” This may include drug trafficking, fraud, organised crime, corruption, robbery, or other antisocial and criminal conduct. The prosecution does not need to establish the exact nature of the predicate offence, only that the money or property was derived from a serious crime rather than a legitimate source.
Types of Money Laundering Offences
Dealing with Proceeds of Crime
The primary offence under section 400.3 of the Criminal Code involves dealing with money or property while knowing, believing, suspecting, or being reckless as to whether it represents proceeds of crime. The penalty depends on the value of the property and the offender’s state of mind at the time.
Structuring Transactions
Structuring, sometimes called “smurfing”, involves deliberately breaking up transactions into smaller amounts to avoid triggering mandatory reporting thresholds. This is a separate offence under the Criminal Code and is specifically designed to prevent evasion of AUSTRAC reporting obligations.
Self-Laundering
A person can be charged with money laundering for dealing with their own proceeds of crime. Self-laundering occurs where someone attempts to conceal, dispose of, or otherwise deal with money they have personally derived from illegal activity.
Penalties
The penalty structure under section 400.3 of the Criminal Code is tiered according to the value of property involved and the offender’s fault element — whether they acted with intention, recklessness, or negligence.
| Value of Property | Maximum Penalty (Intention) | Maximum Penalty (Recklessness) | Maximum Fine |
| Over $10 million | Life imprisonment | 20 years | $2.5 million or more |
| $1 million to $10 million | 25 years | 12 years | Up to $1.5 million |
| Under $1 million | Up to 20 years | Up to 10 years | Up to $600,000 |
Actual sentences vary significantly based on individual circumstances, aggravating and mitigating factors, and whether an early guilty plea is entered.
AUSTRAC’s Role and Reporting Requirements
AUSTRAC is Australia’s financial intelligence regulator and the primary body responsible for enforcing compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).
Reporting entities — including banks, financial institutions, and certain businesses, are required to meet the following obligations.
Suspicious Matter Reports (SMRs) must be filed when a reporting entity suspects, on reasonable grounds, that a transaction relates to tax evasion, money laundering, or terrorism financing.
Threshold Transaction Reports (TTRs) must be lodged for cash transactions of $10,000 or more within 10 days of the transaction.
Cross-Border Transaction Reports must be filed for physical currency of $10,000 or more being carried or mailed into or out of Australia.
Annual Compliance Reports must be submitted between 1 January and 31 March each year, detailing how the reporting entity has met its AML/CTF obligations.
When AUSTRAC identifies suspicious patterns or receives credible information suggesting money laundering, it may refer the matter to the AFP or share intelligence that triggers a law enforcement investigation. Failure to comply with reporting requirements can result in civil penalties, infringement notices, and criminal prosecution.
How the AFP Investigates Money Laundering
The Australian Federal Police (AFP) is the primary agency responsible for investigating Commonwealth money laundering offences. Investigation methods include execution of search warrants at suspected locations, seizure and analysis of financial records, electronic devices, and communication records, examination of bank accounts, cooperation with AUSTRAC through the Fintel Alliance (a public-private financial intelligence partnership), and international cooperation with foreign law enforcement agencies.
Freezing and Restraint of Assets
Under the Proceeds of Crime Act 2002 (Cth), the AFP can seek restraining orders to freeze assets suspected of being proceeds or instruments of crime. These are civil orders, obtained on the balance of probabilities, and operate independently of any criminal prosecution. The Commonwealth’s proceeds of crime laws also allow for unexplained wealth orders and financial penalty orders.
This means your assets can be frozen before you are charged, and well before any conviction is obtained. Acting quickly to obtain legal advice when assets are restrained is critical.
Real-World Scenarios
Scenario 1: Unknowing Involvement
A person receives payments from a business associate and uses those funds for personal expenses and property investment. It later emerges that the funds originated from drug trafficking. The person had no knowledge of the criminal source but may have been reckless in not making enquiries given the circumstances. Whether lack of knowledge provides a complete defence depends on the specific fault element of the charge, and this is precisely the type of case where early legal advice is essential.
Scenario 2: Structuring Transactions
A business owner becomes aware that cash deposits over $10,000 must be reported to AUSTRAC. They begin making regular deposits of $9,500 to stay below the threshold. This is structuring, a separate federal offence, regardless of whether the underlying funds are from a criminal source. The intent to avoid reporting obligations is itself the offence.
Scenario 3: Asset Restraint Before Charge
A person’s bank accounts and property are frozen under a restraining order sought by the AFP under the Proceeds of Crime Act 2002. No charges have been laid. The restraining order was obtained on the civil standard of proof, the balance of probabilities. The person has limited time to respond and contest the order. Without a lawyer acting quickly, the assets may remain frozen for the duration of a lengthy investigation.
Defences to Money Laundering Charges
Several defences may be available depending on the specific charge and circumstances.
Lack of knowledge. Many money laundering offences require proof of knowledge, suspicion, or recklessness regarding the criminal source of funds. If you were genuinely unaware that the property represented proceeds of crime, this can constitute a complete defence. The prosecution bears the burden of proving the required mental element beyond reasonable doubt. However, wilful blindness or deliberately avoiding enquiry can negate this defence.
Legitimate business. Engaging in lawful commercial transactions with legitimately sourced funds is not money laundering. If the funds originate from lawful business activities and are properly documented, this defence may apply.
Mistake of fact. A genuine and reasonable mistake about the value or nature of money or property involved can constitute a defence, provided the mistake was not reckless.
Due diligence. Demonstrating that appropriate precautions were taken and due diligence was exercised, particularly for businesses subject to AML/CTF compliance obligations, may provide a defence or significantly affect the outcome of proceedings.
Frequently Asked Questions
What is the difference between money laundering and fraud?
Fraud is the underlying crime, an act of deception to obtain a benefit dishonestly. Money laundering is what happens afterwards, dealing with the proceeds of that crime in a way that conceals their origin. A person can be charged with both offences if they commit fraud and then launder the proceeds.
Can I be charged if I did not know the money came from crime?
It depends on the specific offence charged. Some offences under Division 400 require knowledge or suspicion. Others are based on recklessness, where the risk was obvious and consciously disregarded. If you genuinely and reasonably did not suspect the criminal source, lack of knowledge may provide a defence, but wilful blindness will not.
What triggers an AUSTRAC or AFP investigation?
AUSTRAC investigations can be triggered by Suspicious Matter Reports from reporting entities, unusual transaction patterns suggesting structuring, non-compliance with reporting obligations, or referrals from other law enforcement agencies. If AUSTRAC identifies evidence of criminal conduct, it refers the matter to the AFP or other relevant agencies.
Can my assets be frozen before I am charged?
Yes. Under the Proceeds of Crime Act 2002 (Cth), the AFP can seek a restraining order over assets on the civil standard of proof, the balance of probabilities. This can happen before any criminal charge is laid and before any conviction is obtained. Time limits apply for responding to these orders, which is why immediate legal advice is critical.
What is the maximum penalty for money laundering in Australia?
For property over $10 million, the maximum penalty is life imprisonment. For property between $1 million and $10 million with intention, the maximum is 25 years. For property under $1 million, penalties range up to 20 years depending on the amount and the fault element. Significant fines may also be imposed. Actual sentences vary substantially based on individual circumstances.
What to Do If You Are Under Investigation or Have Been Charged
- Do not make any statement to police or AUSTRAC investigators without first speaking to a lawyer. Anything you say can be used against you.
- Do not move, dispose of, or transfer any assets that may be subject to investigation, doing so could constitute a further offence.
- Preserve all financial records, communications, and documentation relating to the transactions in question.
- Contact a criminal defence lawyer immediately, particularly if you have received notice of a restraining order, search warrant, or formal investigation.
- If you are a reporting entity facing a compliance investigation, seek legal advice on your obligations before responding to AUSTRAC.
Practical Action Guide
If Police Want to Interview You:
- Stay calm
- Say: “I exercise my right to remain silent and want to speak to my lawyer”
- Get officer details
- Do not sign or say anything without advice
If You Receive Court Documents:
- Read carefully and mark deadlines
- Gather financial docs
- Contact a lawyer within 24 hours
If Assets Are Frozen:
- Do not panic, orders can be contested
- Document legitimate income and hardship
- Apply for living expenses if needed
How O’Brien Criminal & Civil Solicitors Can Help
O’Brien Criminal & Civil Solicitors have extensive experience in white-collar and federal criminal defence, including money laundering charges, proceeds of crime proceedings, and AUSTRAC compliance matters. We appear in the Federal Court, District Court, and Supreme Court across Australia.
Money laundering investigations are long, technically complex, and involve multiple agencies with substantial resources. Early, expert legal representation is your strongest protection, both in responding to asset restraint and in defending any charges that follow.
Call us on 02 9261 4281 or enquire online for a confidential consultation.
