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International funds transfers helped uncover counterfeit car parts scam

Image of car parts

A law enforcement agency used AUSTRAC financial transaction data to investigate a suspect who was selling counterfeit vehicle parts on the Australian market. Authorities alleged that this activity was costing a motor car company millions of dollars in lost revenue.

Authorities established that the suspect was importing counterfeit parts into Australia from China using a registered Australian business the suspect operated. After importing the car parts, the suspect sold them in Australia through a leading car manufacturer, claiming the parts were legitimate.

AUSTRAC information revealed that the suspect sent many international funds transfer instructions (IFTIs), in both his name and the name of his business, to pay an automotive parts company in China:

  • Over a three-year period international funds transfers worth AUD1.3 million were conducted through personal and business accounts operated by the suspect through various banks and remittance services. During this period the suspect’s accounts did not receive any incoming funds transfers from overseas entities, nor record any significant cash activity. This indicated that the bank accounts were receiving funds either from domestic electronic transfers or through cash deposits conducted under the AUD10,000 reporting threshold.
  • Between 2004 and 2006 the suspect sent 19 IFTIs, worth approximately AUD260,000, to a Chinese beneficiary, who was identified as a producer/supplier of counterfeit goods.

Additionally, AUSTRAC received a suspect transaction report (SUSTR) indicating that the suspect’s account had received a AUD26,000 payment for car parts from an overseas purchaser.

During the investigation authorities found that the overseas purchaser had not received the car parts nor heard from the suspect since sending the funds. This led authorities to believe that the suspect had reneged on the sale and kept the payment from the overseas purchaser.

The suspect was not charged in Australia, but over 30,000 counterfeit car parts were removed from the Australian market. Employees of the manufacturing company in China were successfully prosecuted in that jurisdiction.

Offence

  • Fraud (counterfeit goods)

Customer

  • Business

Industry

  • Banking (ADIs)
  • Remittance services

Channel

  • Electronic

Report type

  • IFTI
  • SUSTR

Jurisdiction

  • International – China

Designated service

  • Account and deposit-taking services
  • Remittance services (money transfers)

Indicators

  • Multiple international funds transfers to countries of interest where counterfeit goods are suspected
  • Use of remitter to send large amounts of funds overseas
  • Commingling of illicit funds with legitimate sources of income
  • Multiple, high-value international funds transfers sent to a common beneficiary overseas, from both personal and business accounts
  • Frequent high-value outgoing international funds transfers despite account not receiving any incoming international funds transfers or significant cash deposits
Last modified: 30/07/2015 15:37