Company Director Investigated Over a Mule Account?

Why a director can be personally liable

When a company account is used as a mule account, the investigation does not stop at the company. Police look at who had authority over the account and who controlled or allowed the transactions.

As a director, you may sign for the company account, and you have legal duties of care in running the company. ^[f2] If crime money passed through the account, investigators will look at your role, what you knew and whether you had proper controls.

Sections 424A to 424C of the Penal Code are the mule account offences. Section 424B covers anyone who gives another person control of their account or payment instrument (a bank account, card or online banking login). ^[f1]

This can include a director who gave someone access to a company account that the person then misused. What the director knew, and why access was given, matter to the defence.

When an employee or partner is responsible

Sometimes the director did not run the mule activity personally. An employee with account access, a business partner or an outsider may have used the account without the director knowing.

This matters for your defence. Your personal risk can be lower if you can show three things. Someone else controlled the transactions, you had reasonable oversight, and the misuse happened without your knowledge. ^[f4]

Your lawyer will check who had access to the account, what approval steps existed, and whether any warning signs were visible to you. The answers shape your defence.

What the company freeze means

When an account is frozen under AMLA 2001, all of it is blocked. ^[f3] That means no payroll, no supplier payments, no rent and no running costs.

As director, you have two problems at once: keeping the business going and defending yourself. A written variation application to the agency under Section 44A can release money for essential business costs. It is a written application to the agency that froze the account, and a more senior officer decides it.

Staff need their salaries and suppliers need paying. The longer the freeze runs with nothing done, the more harm to the business and its relationships.

What to do now

Secure all company records. Gather board minutes, financial statements, bank mandates, internal policies and any record of who had account access. These are key evidence for your defence. ^[f2]

Work out who had account access. List the staff, partners or outsiders who had signing authority, online banking logins or the company’s bank cards and tokens. This helps police find the person actually responsible.

Speak to a lawyer before giving a statement. If police call you in, attend. But ask to consult a lawyer before you answer questions. A director’s words carry extra weight, and a careless answer can raise your personal risk.

Do not destroy any records. Do not delete emails, shred papers or remove files from company systems. Destroying evidence is a separate offence and badly damages your defence.

Speak to a lawyer now. You need a lawyer who handles both criminal defence and company matters. Your lawyer can run your defence, apply to vary the freeze so the business can keep going, and deal with the investigating officer for you.

How a lawyer builds a director’s defence

Proof of good governance. Your lawyer will set out the company’s controls, approval steps and oversight. Board minutes, policies and audit records show you took your duties seriously and had systems to stop misuse.

What you knew and why. What you knew about how the account was used, and why access was given, matter to your defence. Your lawyer will check whether you could see the transactions, whether someone hid them, and whether company reports would have shown them.

Who was really responsible. If an employee or partner handled the transactions, your lawyer will gather evidence pointing to that person. This can move the investigation’s focus to the person who actually ran the account activity.

Protecting the company. Your lawyer also works to limit harm to the company. That means applying to vary the freeze for running costs, dealing with staff and suppliers, and working with the company secretary and auditors.

Sources

1. Low & Partners, “Keldai Accounts: When Helping a Friend Becomes a Criminal Offence” (2024)
2. Penal Code (Amendment) Act 2024, Sections 424A, 424B, 424C
3. Companies Act 2016, Director Duties
4. Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA)