Prosecutors will drop charges against Canberra lawyer Bridie Harders, who was charged with conspiracy to deal with the proceeds of crime last year alongside her boss Ben Aulich.
Police arrested 47-year-old lawyer Mr Aulich, as well as 54-year-old accountant Michael Papandrea, in December 2020, and charged them with dealing with proceeds of crime greater than $100,000.
Mr Aulich was also charged with recruiting people to engage in criminal activity.
Upon her arrest, Ms Harders was described by police as a member of the legal community and a "close associate" of Mr Aulich, and she was also charged with dealing with proceeds of crime and money laundering.
But on advice, prosecutors confirmed with the ABC that they would drop charges against Ms Harders - a legal partner at the Aulich law firm - because they have no chance of success.
The charges will be formally dropped next week.
How the arrests unfolded
It was a spectacular moment as police led Mr Aulich, 47, from the Aulich law firm's city premisis to the nearby police station last December.
Earlier raids had been carried out on Mr Papandrea's Kingston office, a grocery store in Queanbeyan and another business in Farrer.
Initially the trio was charged with money laundering but that was quickly adjusted to the conspiracy charges.
At the time police said the arrests followed an eight-month investigation which included telephone tapping.
Police said they would allege the group had discussed how to use contracts and agreement to set up a business to launder the proceeds of crime.
Law firm 'very pleased' with outcome
The prosecution has retained high profile barrister Mark Tedeschi QC to run the case.
The charges against Ms Harders will be withdrawn when her matter is before the court next Monday.
Lawyer Peter Woodhouse has posted a comment on the Aulich firm's website welcoming the development.
"It has always been our position that there was insufficient evidence to bring a charge against Bridie in the first place," he said.
"Naturally, we are all very pleased with this outcome for Bridie and it comes as a great relief to her and the Aulich team.
"The defence of Ben's matter continues and we remain hopeful of the same outcome."
Mr Aulich is due in court next week.