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Tax fraudsters used casinos, businesses to launder funds

Image of two dice being thrown across table

AUSTRAC began monitoring the financial activities of a network of suspects after reporting entities submitted a series of reports about the network's financial activity.

AUSTRAC received suspect transaction reports (SUSTRs), reports of international funds transfer instructions (IFTIs) and significant cash transaction reports (SCTRs), all detailing the suspects' substantial gambling activities. The reports, which had triggered AUSTRAC's automated monitoring system, revealed casino chip cash-outs worth more than AUD1 million and casino chip buy-ins worth almost AUD500,000.

Additionally, more than AUD80,000 was sent to Vietnam by one member of the network. A subsequent SUSTR revealed this same individual was purchasing casino chips on behalf of another suspect.

This financial intelligence was found to relate to an ongoing joint investigation by law enforcement agencies into taxation fraud. Initial search warrants executed as part of this investigation resulted in the seizure of AUD735,000 in cash.

Further investigation by law enforcement officers revealed that two of the suspects were the directors of a company involved in a 'round-robin' money laundering scheme, where illicit funds generated by tax fraud were filtered through sub-contractor companies to launder them. The scheme revealed the following activity by the suspects:

  • payment of cash wages to their employees, some of whom were illegal immigrants and/or recipients of welfare payments. Authorities believe that over AUD2 million in cash income was hidden using this method
  • creation of sub-contractor companies linked to the main company, which they co-owned, and which were used to issue false invoices. Through the use of false invoices, more than AUD1 million was over-claimed as GST input tax credits through the sub-contractor companies when, in fact, the suspects had actually withdrawn the funds from the sub-contractor companies as cash for their own use.

The suspects were each convicted on two counts of defrauding the Commonwealth, several counts of obtaining property by deception and dishonestly causing a risk of loss to the Commonwealth, and one count of dealing with money or property intended to become an instrument of crime. They were sentenced to a total of 10 years imprisonment.

Flow diagram for Case Study 21. Tax fraudsters used casinos, businesses to launder funds.

Offence Tax fraud
Customer Individual
Industry Banking (ADIs); gambling services
Report type IFTI; SCTR; SUSTR
Channel Electronic; physical
Jurisdiction International - Vietnam
Designated service Account and deposit-taking services
Indicators
  • Large casino chip buy-in
  • Large casino chip cash-out
  • Large international funds transfers
  • Purchasing gaming chips for a third party
  • Use of false invoices
Last modified: 30/07/2015 15:34