Fraud and the liability of company directors - Australian Institute of ...

know that the fee has been obtained as a result of conduct by A that was an
offence under s. 232(2), s. 232(3) or any other offence anywhere in the world,
then they commit the offence of money laundering under s. 81 and are liable to
gaol: they have engaged in a transaction that involves the proceeds of an
indictable offence under s. 232(3) and the requisite mental element is also present
(reason to know that the property is derived from an unlawful activity). The
directors may have believed that they were legally entitled to act but claim of
right is no defence under s. 81, nor is ignorance of the law. If company Y is a
cash dealer as defined in the Cash Transaction Reports Act 1988 (Cwlth), their
best course of action is to report the transaction to the Cash Transaction Reports
Agency (CTRA). Under s. 243D(6) of the Australian Securities Commission Act
1989 (Cwlth), they would then gain immunity from liability under s. 81 or s. 82.
The main criticism is that the mental element required for liability under s. 81 or
s. 82 of the Proceeds of Crime Act is not confined to intention, knowledge or
recklessness (cf. Confiscation of Proceeds of Crime Act (NSW), s. 73, where the
offence of money laundering requires knowledge). The objective tests of liability
imposed are inconsistent with the emphasis traditionally attached to subjective
tests of liability for serious offences. Subjective blameworthy states of mind have
been insisted upon in a long line of High Court decisions, from Parker (1963)
111 CLR 610, to Crabbe (1985) 156 CLR 464, to He Kaw Teh (1985) 157 CLR
523 and Giorgianni (1985) 156 CLR 473. It should also be realised that ss. 81
and 82 do not adhere to the model provided by the money laundering offences
enacted under the US Money Laundering Act 1986; under the corresponding US
provisions knowledge is required: 18 USC s. 1956(a)(b) (see further Plombeck
1988).
Attention is also drawn to the effect of s. 243D of the Australian Securities
Commission Act. Under this provision a cash dealer must report suspected
Corporations Law and ASC Law offences even where the suspicion relates to an
offence that may have been committed by the cash dealer itself. When the Cash
Transaction Reports Act 1988 (Cwlth) first came into effect it was commonly
thought that the suspect transaction reporting obligation related to offences
suspected on the part of persons with whom a cash dealer engaged in a
transaction. The extension of the suspect transaction obligation under s. 243D
means that cash dealers are legally obliged to report suspected breaches of the
Corporations Law whether or not they are implicated as the victim or as an
offender. Assume that the directors of a cash dealer come to learn that dealers in
its trading room have been trading ahead of customer orders. Under s. 243D the
suspected breach of s. 844(2) of the Corporations Law by the cash dealer and the
employees must be reported to the CTRA. Failure to report is a serious offence
on the part of the cash dealer and any director knowingly concerned in the failure
to report is liable for complicity.