Solicitor Ben Aulich and accountant Michael Papandrea allegedly planned to help the officer buy a supermarket "for the specific and sole purpose of laundering $1.2 million per year", prosecutor Mark Tedeschi QC revealed in the ACT Magistrates Court on Friday.

Aulich, 49, and Papandrea, 56, have both pleaded not guilty to a charge of conspiracy to commit money laundering. The lawyer also denies recruiting the accountant to engage in criminal activity.

Since the pair's arrests in December 2020, the court has heard an undercover police officer, posing as a client of Aulich's self-titled law firm, covertly recorded a number of conversations.

Mr Tedeschi read out small portions of the transcript of one particular discussion on Friday, during legal arguments about whether the case ought to end up in the ACT Supreme Court.

The prosecutor said the undercover officer, using the name Alex Torosian, had indicated he anticipated earning "100 grand a month, at least" from the sale of illegally imported tobacco.

He told the court Aulich had responded to that figure by saying it was "not chump change".

"I don't think we can put it in the bank," Aulich allegedly said.

Mr Tedeschi said Aulich had also spoken of a hypothetical future "income of 1.2", which he alleged was a reference to the fictitious cigarette sales netting $1.2 million per year.

"What it means is you've got a wardrobe full of f---ing cash," Aulich allegedly told the undercover officer. "What are you going to do with it?"

The undercover officer is said to have agreed he could not "just walk into the bank" with it.

Mr Tedeschi told the court it was his case that Aulich and Papandrea proceeded to discuss "how they're going to go about laundering" the undercover officer's anticipated earnings.

"There is talk about purchasing a business for the specific and sole purpose of laundering $1.2 million per year," he added.

Mr Tedeschi said this in an attempt to persuade special magistrate Michael Crompton the case could not be finalised in the Magistrates Court, which lacked the jurisdiction to deal with charges involving money or property with a value exceeding $30,000.

Aulich's barrister, Steven Whybrow, countered that Mr Tedeschi's argument was "a paper tiger" because there was not actually any money or property in this case.

He said there was merely talk, from an "agent provocateur", about "hypothetical" amounts of cash.

Mr Whybrow also described the prosecution's case as "rubbery", saying Aulich and Papandrea were now only accused of conspiring with each other when the initial allegation was that the pair had illegally plotted with each other, the officer and lawyer Bridie Harders.

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Charges against Mrs Harders, Aulich's former business partner, were discontinued last year.

Papandrea's lawyer, Kamy Saeedi, did not address the court on the issue of jurisdiction.

Mr Crompton ultimately found in favour of Mr Tedeschi, saying the conspiracy charges "clearly relate to money" worth more than $30,000.

"It matters not that the money ... was not actually laundered at the time of laying the charges," the magistrate said.

Mr Crompton added that, in any event, he believed the Magistrates Court would be unduly limited in the penalty it could impose if Aulich and Papandrea were ultimately convicted.

The lower court could not impose a jail sentence of any more than five years in that event, but the Supreme Court could dish out up to 10 years behind bars on the conspiracy charge.

Mr Tedeschi had earlier urged Mr Crompton to also take this into account, saying it was "difficult to imagine" a more serious money laundering conspiracy allegation than one that involved "an officer of the court".

In light of Mr Crompton's ruling that the charges could not be finalised in the Magistrates Court, the case will proceed to a contested committal hearing on November 10.

Such a hearing is designed to determine whether there is sufficient evidence to warrant a trial.

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