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Case studies

Banking (ADIs) and bullion


Case 1 - Fraudsters cashed in with false identification documents

A law enforcement agency launched an investigation into two persons after they were caught in possession of numerous counterfeit driver's licences and several charts detailing multiple identities. The charts related to false loans and other fraudulent activities. The suspects were also in possession of keys to 30 post office boxes scattered around Australia.

The suspects were identified by law enforcement officers as Indian nationals in Australia on student visas who were also licensed taxi cab drivers. Further investigations indicated the suspects were part of a syndicate that recruited people from India to undertake loan fraud within Australia. The syndicate paid for recruits to relocate to Australia as students, and once in Australia the students found work in the taxi and hire car industry. It is alleged that by working for these companies the recruits were able to steal personal details from victims to lodge fraudulent claims for loans from financial institutions.

The offenders opened credit card accounts with numerous banks and had the cards and personal identification numbers delivered to post office boxes. The syndicate employed full-time couriers who travelled interstate to collect the mail from the post office boxes. The offenders collected the cards, depleted the accounts, and forwarded the money to other syndicate members for the purchase of gold bullion and for living expenses. The cards were depleted of all funds, usually between AUD10,000 and AUD15,000, or were used directly to purchase bullion. The couriers kept only approximately AUD200 for themselves, with the remaining funds returned to the main organisers.

It is alleged that the bullion and cash were repatriated to overseas entities.

Offence Fraud
Customer Individual
Industry
  • Banking (ADIs)
  • Bullion
Channel
  • Physical
  • Mail
Jurisdiction International - India
Designated service
  • Bullion trading
  • Accounts
  • Loan services
Indicators
  • Available credit being maximised in short space of time without repayment
  • Cash purchases of bullion
  • Newly opened accounts have credit cards and other details mailed to post office boxes
  • No repayment or attempted repayment on credit
  • Use of false identification

Banking (ADIs), gambling, motor vehicles, securities and derivatives


Case 2 - Crime network laundered money through bank accounts, shares and luxury vehicles

AUSTRAC referred a financial intelligence assessment and a SUSTR on to a law enforcement agency, which led to an investigation into the alleged money laundering activities of a criminal syndicate linked to suspected drug trafficking. The alleged activity involved the movement of several million dollars through bank accounts, a shares portfolio and the purchase of luxury motor vehicles. AUSTRAC was alerted to the fact that an individual was banking large amounts of cash on a daily basis, totalling anywhere between AUD20,000 and AUD60,000 per week, for months.

In the information AUSTRAC referred to the law enforcement agency, a syndicate member was initially identified by AUSTRAC as a result of approximately AUD300,000 in his account which had been sourced from two casino cheques. Further analysis of AUSTRAC information revealed that the suspect had made over AUD2 million in cash deposits into bank accounts that he operated.

As the investigation gathered momentum, search warrants were executed on properties linked to the syndicate members. Numerous property tracking documents relating to syndicate assets and unexplained wealth were seized by law enforcement officers. Investigators located a bank account with a balance of approximately AUD800,000 and a 2006 Mercedes sedan that had been purchased for AUD300,000. Both the bank account balance and the vehicle were suspected of being derived from proceeds of crime. Law enforcement officers interviewed a syndicate member about these assets and he could offer no explanation as to how he had obtained the level of funds described while earning only a mid-level salary.

The execution of another search warrant on a property linked to the initial syndicate member revealed over AUD1.2 million in cash, and small amounts of methylamphetamine ('ice'). In addition, law enforcement officers seized numerous luxury items and home entertainment equipment believed to be the proceeds of criminal offences. Another residence was searched and found to be empty. It was noted, however, that the rent on this property had been paid months in advance.

This same person of interest had also bought shares and motor vehicles in a direct relative's name, and AUD300,000 was discovered in an account belonging to the same relative. It was ascertained that this particular relative was earning approximately AUD40,000 a year.

The resulting law enforcement investigation into the activities of the syndicate members has led to a total of approximately AUD3.9 million being recovered or restrained.

Offence
  • Money laundering
  • Drug trafficking
Customer Individual
Industry
  • Banking (ADIs)
  • Gambling
  • Motor vehicles
  • Securities and derivatives
Channel
  • Physical
  • Agent/third party
Jurisdiction Domestic
Designated service
  • Accounts
  • Deals in securities markets
  • Gambling
Indicators
  • Assets purchased in family member's name
  • Cash purchase of high-value assets (motor vehicles)
  • Financial activity inconsistent with established customer profile
  • Large cash deposits into bank accounts on a regular basis
  • Rent for property paid well in advance
  • Use of third party accounts

Banking (ADIs)


Case 3 - False identification used in bank fraud

An individual involved in large-scale bank fraud created a range of false identification documents to open bank accounts and apply for personal loans and credit cards. The individual deposited the money received from the loans into a bank account. The bank statement received for the account was then used at another bank as proof of financial means to apply for further loans.

The offender initially opened savings accounts and credit cards with the loan funds, which were then deposited to another account after approval. Once the money was in the account, either the offender or one of two associates withdrew the funds as bank cheques (on the justification of buying a car or similar) made out to other false identities with false accounts and then deposited the cheque/s into these accounts. Funds were also withdrawn as cash via ATMs or bank branches. The offender repeated this process using multiple false identities, fraudulently generating over AUD1 million in funds.

Offence Fraud
Customer Individual
Industry Banking (ADIs)
Channel Physical (face-to-face)
Jurisdiction Domestic
Designated service
  • Accounts
  • Loan services
Indicators
  • An individual or business client has multiple bank accounts with several institutions, but with no economic rationale for having them
  • Customer is known to be operating multiple accounts
  • Multiple bank cheques purchased by different individuals but payable to a common beneficiary
  • Payments by large third party cheques endorsed in favour of the customer
  • Use of false identification documentation

Case 4 - Large wire transfers sent to support terrorist activities

Law enforcement officers commenced an investigation into alleged fundraising and procurement activities by Australian-based persons on behalf of an identified terrorist organisation. Officers examined the activities of the organisation in accordance with Australia's obligations under United Nations Security Council Resolution 1373 (2001).

Investigations established that Australian-based individuals were sending a number of large international funds transfers to businesses in another country. These businesses were believed to be front organisations used to control funds for the terrorist organisation. The overseas individuals were subsequently sending multiple wire transfers to South-East Asia.

A law enforcement investigation established that the majority of the funds originated from cash raised under the guise of charitable activities. The funds were transferred via direct debit into a central account. Third parties also 'rolled' funds from another account into this central account, to be repaid later.

The suspects in Australia funded their activities via cash cheques and credit cards which were linked to the central account. Legitimate businesses, such as grocers, restaurants and hospitality venues were also used for fundraising activities. The funds were distributed by various techniques, including person-to-person, bank account deposits, asset purchases (e.g. real estate), and funds transfers from a main bank account into individuals' accounts for alleged 'expenses' relating to the administration of the charitable organisation. The suspects used wire transfers to transfer the money to international bank accounts, and bank transfers to transfer to accounts held within Australia. The individuals frequently conducted these transactions via internet banking.

AUSTRAC information identified numerous structured wire transfers of values just under AUD10,000 each. One individual transferred in excess of AUD300,000 in this manner. A central account was not used for the wire transfers, instead the wire transfers were organised through several different banks.

The majority of the transactions were in the suspects' own names, but third parties were used to create the main bank account. Third parties were also used to send wire transfers and conduct purchases using funds withdrawn from the central account.

As a result of the investigation, Australian authorities arrested several individuals who have been charged with being members of a terrorist organisation, providing support or resources to a terrorist organisation, and making funds available to a terrorist organisation.

Offence
  • Terrorism financing
  • Money laundering
Customer
  • Individual
  • Business
Industry Banking (ADIs)
Channel
  • Physical
  • Electronic (internet)
  • Agent/third party
Jurisdiction International - South-East Asia
Designated service
  • Accounts
  • Electronic funds transfer
Indicators
  • International wire transfers to countries known to be high risk terrorism financing jurisdictions
  • Multiple cash cheques
  • Structured wire transfers
  • Third parties sending wire transfers
  • Third parties used to create bank accounts

Case 5 - Students laundered money to receive tax concessions

Two Chinese 'students' suspected of laundering millions of dollars became the targets of a law enforcement investigation. On entering Australia one of the students was found to be carrying AUD30,000 in undeclared currency. He was charged under section 53 of the AML/CTF Act (failure to declare currency in excess of AUD10,000) and later pleaded guilty to this offence.

Further inquiries revealed that the students and their company had received significant incoming funds transfers from Hong Kong. Almost immediately these transactions were followed by similar amounts being sent out of Australia to China. Approximately AUD5.2 million in funds transfers were sent from Hong Kong to the students in Australia. The students subsequently transferred an estimated AUD5.6 million to a company in China.

It is possible that the funds being sent from Hong Kong to Australia and then to China actually originated in China. The funds were possibly being used to falsely receive tax concessions from the Chinese government by claiming that the funds were from 'foreign investors'.

The investigations established that the pair owned a number of valuable properties despite the fact that one of them was an unemployed student. Both appeared to have unexplained wealth and assets.

The two students have been charged with money laundering under section 400.3 of the Criminal Code Act 1995.

Offence
  • Cash couriering
  • Money laundering
Customer Individual
Industry Banking (ADIs)
Channel Electronic
Jurisdiction International - Hong Kong, China
Designated service Electronic funds transfer
Indicators
  • Activity inconsistent with customer profile
  • Company accounts used only to transfer money without other corresponding commercial activity
  • Incoming wire transfer with corresponding wire transfer appears to be a 'u-turn' transaction
  • Unusually large transfer of money from an individual to a company

Case 6 - Asian crime syndicate laundered money with cheques

AUSTRAC disseminated a SUSTR to a law enforcement agency, which triggered an investigation into an Asian crime syndicate's money laundering activities. The SUSTR detailed a distinct pattern of regular weekly deposits of cheques to the value of approximately AUD100,000. These deposits were followed a few days later by withdrawals of amounts below the AUD10,000 reporting threshold.

A company linked to this syndicate was also found to be funnelling funds through numerous business accounts before withdrawing the cash in structured amounts. The cash was then dispersed between syndicate members. It is believed that this activity was undertaken for tax avoidance purposes and that approximately AUD6.5 million was laundered through the scheme.

The resulting investigation led to a number of individuals being arrested and charged with money laundering.

Offence Money laundering
Customer
  • Individual
  • Business
Industry Banking (ADIs)
Channel Physical (face-to-face)
Jurisdiction Domestic
Designated service Accounts - chequebook facility
Indicators
  • Cash withdrawals from company accounts
  • Regular deposits followed by structured cash withdrawals

Banking (ADIs) and money transfer (remittance)


Case 13 - Funds obtained through an investment scam

An individual owned a trucking company and also promoted a related investment scheme. The investment scheme offered a AUD36,000 investment opportunity which provided a 49 per cent share in a truck over a five-year contract period.

The AUD36,000 investment was framed as a loan to purchase one of the new AUD47,000 trucks that the individual was assembling in China. It was proposed that these vehicles would form part of a commercial transport fleet. Investors were told they would receive monthly repayments, varying from AUD1,200 to AUD2,000 per month, and a AUD30,000 final payment at the end of the contract. This was promoted as an approximate return of AUD180,000 against the initial investment.

Law enforcement inquiries revealed the individual attracted 120 investors to the scheme, with a number of investors purchasing several trucks. The individual secured a total of AUD9.5 million from investors. Although the individual claimed to have purchased 296 vehicles, less than 30 trucks were actually owned by the individual's company. The individual fled Australia only to be arrested on fraud charges in another country. When released on bail overseas the individual returned to Australia and was subsequently arrested by law enforcement officers.

Investigations revealed that the offender had spent the proceeds of the scam to support a lavish lifestyle. The offender had made several large outgoing wire transfers totalling approximately AUD500,000, as well as numerous smaller transfers conducted through a money remitter in amounts of less than AUD2,000 per transaction.

Offence Fraud
Customer Individual
Industry
  • Banking (ADIs)
  • Money transfer (remittance)
Channel Electronic
Jurisdiction Domestic
Designated service
  • Designated remittance arrangement
  • Electronic funds transfer
  • Loan services
Indicators
  • Financial activity inconsistent with the customer profile
  • Large unexplained variances in transactional activity

Case 14 - Growth hormone smuggling syndicate smashed

A law enforcement investigation targeting smugglers of steroids, growth hormones and other illegal performance-enhancing drugs identified a number of suspects involved in importation and distribution, operating throughout Australia. The traffickers within Australia were found to be sending funds overseas totalling several hundred thousand dollars to purchase the illicit substances. Additionally, they were found to be receiving several thousand dollars each week in revenue from the sale of the illicit substances.

The traffickers used internet chat rooms and forums for networking and to order the drugs online, and used legitimately issued identities, obtained in false names, to open multiple post office boxes to receive the drugs. They also used internet-based payment facilities and money remittance services in Australia to arrange the payments for the drugs, with the majority of payments under AUD1,000.

The overseas suppliers were aware of the prohibition on importing these drugs into Australia and intentionally provided false descriptions of the goods to circumvent these controls. The traffickers enlisted friends and spouses to make payments on their behalf and chose different branches from which to make payments. They also regularly changed names and purposely misspelled names and addresses. The full addresses of the overseas beneficiaries were never reported, only the region.

The resulting law enforcement operation led to the execution of over 140 warrants across Australia.

Offence Drug importation
Customer Individual
Industry
  • Banking (ADIs)
  • Money transfer (remittance)
Channel
  • Electronic (internet)
  • Mail
Jurisdiction International
Designated service
  • Designated remittance arrangement
  • Money on deposit
Indicators
  • Multiple low-value wire transfers
  • Transactions conducted in various geographical locations
  • Use of internet-based payment facilities
  • Use of multiple post office boxes
  • Third parties sending wire transfers

Case 15 - Money remitter used for attempted people smuggling

An investigation was conducted into an individual who had previously been convicted of charges relating to encouraging acts of indecency overseas (involving children). The individual's passport had been cancelled upon his release from prison because of the possibility of him attempting to travel to a high risk child-sex-tourism country.

The investigation revealed that, since his release from prison, the individual had been in contact with a young person in South-East Asia with the intention of transporting the young person to Australia.

Wire transfers were identified which were sent by the offender in Australia to the potential victim overseas through both a money remitter and a bank. These transfers were in small amounts below AUD200 and were conducted regularly over a 15-month period.

The individual was arrested and sentenced to six years imprisonment.

Offence People smuggling
Customer Individual
Industry
  • Banking (ADIs)
  • Money transfer (remittance)
Channel Electronic
Jurisdiction International - South-East Asia
Designated service
  • Designated remittance arrangement
  • Electronic funds transfer
Indicators Multiple low-value wire transfers

Case 16 - Profits made from the sale of stolen copper wiring

This investigation involved the theft of copper wiring from various railway lines and suburban stations. The suspect owned a scrap metal business that had historically shipped large amounts of scrap metal and cable to buyers in Asia. It was alleged the suspect purchased copper wire stolen from suburban railways in Australia and shipped the wire to Asia for significant profit.

AUSTRAC received financial transaction information which indicated unusual business activity by the individual in question. This report triggered further financial analysis of the activities of other individuals, as well as related business activities which identified quite dramatic changes in financial activity, such as an increase in the frequency and size of incoming wire transfers. This increased activity included a 700 per cent increase in funds received over the period of one year. There were also increases in cash deposits and withdrawals by the suspect. The funds in question were transferred to Australia principally through mainstream banks, but a remittance agent in Asia was also used to send funds to personal accounts in Australia which were linked to the suspect.

Offence Theft
Customer Individual
Industry
  • Banking (ADIs)
  • Money transfer (remittance)
Channel Electronic
Jurisdiction International - Asia
Designated service
  • Accounts
  • Designated remittance arrangement
  • Electronic funds transfer
Indicators
  • Increase in cash deposits and withdrawals
  • Regular wire transfers
  • Significant change to an established financial pattern
  • Wire transfers into personal accounts appear to be from company activity

Banking (ADIs), money transfer (remittance), and motor vehicles


Case 17 - Student couriered counterfeit bank drafts

A student attempted to courier envelopes to five associates in the United Kingdom (UK). The envelopes contained what were believed to be counterfeit completed and signed bank drafts drawn on an overseas bank.

The envelopes were seized and a search conducted on the student's address, where a false passport and further counterfeit bank drafts were discovered. The student confirmed the false passport had been used to undertake transactions with a money remitter.

Investigators believe the student purchased motor vehicles in the UK over the internet. The bank drafts were sent to the vehicle owners for more than the amount agreed and they were then contacted and asked to refund the overpayment to a bank account in the UK. The owners of the vehicles did so prior to the draft being identified as counterfeit, and so were defrauded of the alleged 'overpayment' amount.

Over four years the student sent in excess of 170 IFTIs totalling approximately AUD182,000 in an attempt to launder the proceeds of the fraudulent activities. A large majority of these transfers were sent to Nigeria. AUSTRAC identified that the outbound transfers sent to Nigeria were followed within one to seven days by inbound transfers from United States-based individuals. The transactions ranged between AUD50 and AUD17,000. Analysis of the IFTIs identified that over 82 per cent linked to the student and the student's associates had a value of less than AUD1,500.

The student was arrested and charged.

Offence Fraud
Customer Individual
Industry Banking (ADIs) Money transfer (remittance) Motor vehicles
Channel Electronic
Jurisdiction International - United Kingdom, Nigeria, United States
Designated service Accounts Designated remittance arrangement
Indicators
  • Financial activity inconsistent with the customer profile
  • International wire transfers to countries not associated with the established customer profile
  • Multiple low-value wire transfers
  • Purchase of high-value assets (motor vehicles)

Banking (ADIs), money transfer (remittance), and real estate


Case 18 - Wire transfers used in welfare fraud

A SUSTR received and analysed by AUSTRAC prompted an investigation into an individual and the individual's partner, who were in receipt of welfare benefits. The pair had been receiving benefits for several years and during this time had not declared income from any source.

AUSTRAC financial reporting revealed that the pair had sent 23 wire transfers in excess of AUD100,000 to the United States (US) over a 14-month period. These outgoing wire transfers were made exclusively through designated remittance service agents to entities residing in the US. A smaller number of incoming wire transfers were received from the US and Canada. Additionally, two previously unknown bank accounts were identified through the SUSTR.

Several other detailed SUSTRs indicated that the male individual was probably involved in the housing construction industry. Investigations into the activities of the pair indicated they were generating substantial incomes from undeclared sources, including business websites and real estate.

Offence Fraud
Customer Individual
Industry
  • Banking (ADIs)
  • Money transfer (remittance)
  • Real estate
Channel Electronic
Jurisdiction International - US, Canada
Designated service
  • Designated remittance arrangement
  • Accounts
Indicators
  • Activity inconsistent with customer profile
  • Transferring funds into third party accounts
  • Use of multiple accounts

Banking (ADIs), motor vehicles, and real estate


Case 19 - Children's accounts used to launder money

The individuals involved in this example opened bank accounts in the names of their infant grandchildren. These accounts were then used to move in excess of AUD201,000 in cash deposits. These funds were used to purchase luxury motor vehicles and property for the individuals in question.

When law enforcement officers investigated the case further, they uncovered a money laundering operation and large-scale cocaine importation. The resulting law enforcement investigation has led to the confiscation of approximately AUD16 million in cash and a further AUD4 million in other assets.

Offence

  • Money laundering
  • Drug importation

Customer

Individual

Industry

  • Banking (ADIs)
  • Motor vehicles
  • Real estate

Channel

Physical (face-to-face)

Jurisdiction

Domestic

Designated service

Accounts

Indicators

  • Children's account used to facilitate the purchase of high-value assets (motor vehicles, property)
  • Large cash deposits into accounts
  • Operation of account inconsistent with its intended purpose

Banking (ADIs) and professional services


Case 20 - Accountant misused power to conduct fraud

An accountant employed by an educational institution and another company was alleged to have defrauded these two organisations of approximately AUD292,000.

The accountant's method was to redirect company payments for legitimate invoices to his personal account. When a payment reminder for the invoice was received he organised payment to the creditor. The accountant wrote an invoice for double payment and claimed one payment himself. The accountant also created false invoices/payments to himself from the company.

A credit union lodged a SUSTR with AUSTRAC detailing the accountant's suspicious conduct involving high-value cash and cheque deposits and withdrawals. The basis of the suspicion was that none of the transactions were over AUD10,000 and the transactional activity did not correspond with the profile of the customer.

AUSTRAC information also detailed the accountant's use of wire transfers to Afghanistan and Egypt. These transactions were between amounts of AUD4,000 and AUD11,000 and were all conducted through the same bank branch within several days of each other.

The accountant was arrested and ultimately charged with multiple counts of fraud.

Offence Fraud
Customer Individual
Industry
  • Banking (ADIs)
  • Professional services
Channel Physical
Jurisdiction International - Afghanistan, Egypt
Designated service
  • Accounts
  • Australian financial services licence
  • Electronic funds transfer
Indicators
  • Activity is inconsistent with customer profile False invoicing
  • Structured deposits clustered over a period of time
  • Structured withdrawals clustered over a period of time
  • Transactions occurring in a cluster made by the same person International wire transfers to countries known to be high risk terrorism financing jurisdictions

Banking (ADIs), and securities and derivatives


Case 21 - Stock market fraud

An investigation into an individual trading through a contract for difference (CFD) account, via a brokerage firm, resulted in proceeds of crime restraining orders being placed on the individual's assets.

A CFD product is a form of derivative in which an agreement is made to exchange the difference in value of a particular share (or other financial instrument) between the time at which a contract is opened and the time at which it is closed. The product allows a trader to buy and sell in any market, to profit from rising and falling prices and to establish a deposit or margin to gain exposure to markets without tying up capital. Any profits/dividends from the CFD derivative are domestically transferred/debited to the individual's conventional bank account.

In relation to this investigation the profits were debited to a major Australian bank.

The subject of the investigation used false identification documents, including a false citizenship certificate and driver's licence, to open the trading account. The registration was conducted via the internet.

The individual became the subject of a SUSTR submitted to AUSTRAC which detailed activity involving the structuring of cash deposits into an account. The SUSTR also highlighted that over an eight-day period approximately AUD390,000 was deposited into the account in structured amounts, and in some instances deposits were made on the same day at branches in New South Wales and South Australia.

The investigation identified that the account had traded and increased in value to AUD762,000, which was subsequently restrained through proceeds of crime restraining orders. AUSTRAC information assisted in firstly identifying the matter and then commencing proceeds of crime action.

Offence Structuring Fraud
Customer Individual
Industry
  • Banking (ADIs)
  • Securities and derivatives
Channel Electronic
Jurisdiction Domestic
Designated service
  • Deals in securities markets
  • Accounts
Indicators
  • Abuse of internet registration systems
  • Multiple same day transactions
  • Structuring of cash deposits
  • Use of false identification documentation

Case 22 - Company used tax haven country to evade tax

An Australian resident company that was receiving funds from a known offshore tax haven was the subject of an audit. The director/shareholder of the company was also connected to another company established in a tax haven. This tax haven company had purchased shares in a United Kingdom company and then sold them for a substantial capital gain. Some of the profits were repatriated to Australia via the use of false invoices issued by the Australian resident company and the funds entered the country through large wire transfers, all in an attempt to avoid paying tax.

As a result of the audit, the director/shareholder was assessed on income earned from worldwide sources and agreed, as part of the settlement, to cease his involvement in the tax haven-based company and repatriate all funds held in overseas jurisdictions.

As a result approximately AUD1.4 million in tax and penalties were raised.

Offence

Tax fraud

Customer

  • Business
  • Individual

Industry

Banking (ADIs)Securities and derivatives

Channel

Electronic

Jurisdiction

International - United Kingdom

Designated service

  • Deals in securities markets
  • Electronic funds transfer

Indicators

  • Client's affairs involve company incorporated in an offshore jurisdiction
  • Wire transfers involving an offshore tax haven*

* The Australian Tax Office maintains a list of jurisdictions it currently considers to be tax havens. This list is available on the Tax Office website and continues to be reviewed and updated as circumstances change.


Banking (ADIs) and money transfer (remittance)


Case 23 - Russian 'bride' scam

A law enforcement agency investigated a scam affecting Australian customers who were choosing Russian 'brides' from images posted on dating websites and contacting them via email. The resulting email conversation usually entailed the Russian brides asking for an up-front payment for a plane ticket to Australia so they could meet face-to-face, or alleging they were suffering a 'bad financial situation', 'life crisis' or similar and requesting financial assistance. The amounts of money requested varied from AUD200 to AUD30,000. Once the facilitators of the scam received as much money as possible from the customers, they cut off all contact with the Australian victims and removed the images from the website.

AUSTRAC data revealed substantial amounts of money being remitted overseas, mostly to Bulgaria, Ukraine, Romania, Russia and Hungary. The overseas beneficiaries of the funds were linked to the perpetrators of the scam, who were based in Queensland. The network used internet-based payment systems to process credit card transactions and allow the network to receive funds from subscribers. These transactions were conducted by making a payment to the company which then forwarded the funds to a nominated beneficiary customer, usually the scam operator.

Offence

Fraud

Customer

Individual

Industry

  • Banking (ADIs)
  • Money transfer (remittance)

Channel

Electronic (internet)

Jurisdiction

International - Bulgaria, Ukraine, Romania, Russia, Hungary

Designated service

  • Designated remittance arrangement
  • Electronic funds transfer

Indicators

  • Company using a remittance service to transfer funds
  • Large, high volume transactions are made through a remitter
  • Use of credit card internet transactions
  • Use of internet-based payment facilities

Case 24 - Wire transfers structured to import 'ice'

A courier who was used to import drugs into Australia was arrested by law enforcement officers, sparking a wider law enforcement investigation.

The investigation established that a member of a crime syndicate in Australia was sending wire transfers to the drug courier overseas. These wire transfers were made through a money remitter and three different banks, and were alleged to have been directly related to the purchase of drugs. The wire transfers were all in amounts just below AUD10,000. The banks used were all in the same suburb and the ordering customers were relatives of the main individual involved in the drug importation. The transactions were sent to an account in Malaysia belonging to the same individual.

Further wire transfers were sent by the syndicate members in amounts less than AUD1,000.

To date, the resulting law enforcement investigation has led to one person being convicted of importing methylamphetamine ('ice') and sentenced to six-and-a-half years imprisonment.

Offence

Drug importation

Customer

Individual

Industry

  • Banking (ADIs)
  • Money transfer (remittance)

Channel

Electronic

Jurisdiction

International - Malaysia

Designated service

  • Accounts
  • Designated remittance arrangement
  • Electronic funds transfer

Indicators

  • Structured wire transfers
  • Money sent from multiple remitters in the same geographical location
  • Third parties sending wire transfers

Banking (ADIs), money transfer (remittance), and professional services


Case 25 - Accountant assisted in drug importation and money laundering

Law enforcement launched an investigation into allegations that a Colombian-based syndicate was involved in the regular importation of commercial quantities of cocaine into Australia. The proceeds of the sale of the drugs were allegedly repatriated back to the United States (US) and laundered through the black market peso exchange.

Inquiries conducted within the US and Australia indicated that the offenders had purchased a debt owed to the Colombian-based syndicate in exchange for cash received in Australia. It is suspected that the offenders made payments to a member of the syndicate in Colombia, before travelling to Australia to receive the cash.

Investigations established that the syndicate enlisted the services of an accountant/financial advisor to assist with the laundering process. Money was laundered via a foreign exchange company which remitted funds to various bank accounts overseas. Once the foreign exchange company and the syndicate had agreed on the rate to exchange Australian dollars into United States dollars, a member of the syndicate deposited cash into accounts held by the foreign exchange company at various inner-city banks. The syndicate had arranged for the foreign exchange company to remit these funds to overseas bank accounts as soon as they were deposited. The syndicate had also opened a safe deposit box at a bank, where they stored approximately AUD800,000 in cash.

As a result of the law enforcement operation, three members of the syndicate were arrested in Australia in possession of approximately AUD2.6 million in cash. The three were charged with money laundering under section 400.3 of the Criminal Code Act 1995. One of the members has now been convicted of this offence.

Offence Drug importation Money laundering
Customer Individual
Industry
  • Banking (ADIs)
  • Money transfer (remittance)
  • Professional services
Channel Physical Electronic
Jurisdiction International - US, Colombia
Designated service
  • Custodial or depository service
  • Foreign exchange services
  • Accounts
  • Designated remittance arrangement

Indicators

  • Multiple deposits made in the same geographical location
  • Use of gatekeepers (accountant)
  • Use of safety deposit boxes
  • Multiple wire transfers involving a high risk drug country

Banking (ADIs), motor vehicles and real estate


Case 26 - High-value assets purchased to conceal illicit drug profits

Approximately 60 bank deposits of amounts less than AUD10,000 were deposited into an individual's account within a four-month period, totalling AUD550,000. Money was also deposited at a credit union.

Following this series of structured deposits into the accounts, the individual in question purchased three real estate properties with bank cheques, and a high-value motor vehicle with AUD66,900 cash. It is not known how the significant amount of cash required to pay for the car was delivered to the motor vehicle dealer, but it was withdrawn from a bank account and paid to the dealer in two instalments.

A law enforcement investigation commenced and the suspect was eventually charged with supplying prohibited drugs and money laundering offences, and approximately AUD1.5 million worth of assets have been restrained.

Offence
  • Drug Trafficking
  • Money laundering
Customer Individual
Industry
  • Banking (ADIs)
  • Motor vehicles
  • Real estate
Channel Physical
Jurisdiction Domestic
Designated service
  • Accounts
  • Money on deposit
Indicators
  • Cash purchases of high-value assets (motor vehicle, real estate)
  • Structured deposits clustered over a period of time
  • Use of bank cheques

Banking (ADIs) and professional services


Case 27 - Accountant used tax haven country in offshore scheme

An Australian accountant became the subject of an audit after it was identified that a number of entities situated in a tax haven country had been transferring money to an account linked to the accountant. Auditors discovered that the accountant had enlisted high net worth clients to participate in an offshore scheme.

The scheme involved the creation of false invoices for overseas expenses which were purportedly incurred in setting up an offshore business. These invoices were then used to support claims for tax deductions and losses claimed in tax returns. The accountant received a fee for the scheme and the money sent overseas was returned to the clients as fictitious loans.

As a result approximately AUD895,000 in tax and penalties were raised.

Offence

Tax evasion

Customer

  • Business
  • Individual

Industry

  • Banking (ADIs)
  • Professional services

Channel

Electronic

Jurisdiction

International

Designated service

  • Accounts
  • Electronic funds transfer

Indicators

  • False invoicing
  • Wire transfers involving an offshore tax haven*

*The Australian Tax Office maintains a list of jurisdictions it currently considers to be tax havens. This list is available on the Tax Office website and continues to be reviewed and updated as circumstances change.


Banking (ADIs), and securities and derivatives


Case 28 - Company director misused family trust

An Australian publicly listed company and one of its directors came to the notice of auditors during a taxation audit of another taxpayer. Information identified a very large IFTI relating to the sale of shares in the Australian company by a British Virgin Islands (BVI) company.

The BVI company had subsequently transferred large sums of money back to a family trust in Australia. Further financial analysis identified an additional large wire transfer from another BVI entity to purchase shares in a private company controlled by the taxpayer. The trust and the individuals involved had not lodged tax returns for a number of years.

As a result approximately AUD2.8 million in tax and penalties were raised.

Offence Tax evasion
Customer
  • Business
  • Individual
Industry
  • Banking (ADIs)
  • Securities and derivatives
Channel Electronic
Jurisdiction International - British Virgin Islands
Designated service
  • Deals in securities markets
  • Electronic funds transfer
  • Trust accounts
Indicators Wire transfers involving an offshore tax haven*

* The Australian Tax Office maintains a list of jurisdictions it currently considers to be tax havens. This list is available on the Tax Office website and continues to be reviewed and updated as circumstances change.


Bullion


Case 29 - Bullion purchased with cash

An investigation into money laundering and structuring offences was initiated by a SUSTR received by AUSTRAC and subsequently forwarded to a law enforcement agency. The primary suspect of the investigation was engaged in the purchase of approximately AUD180,000 worth of silver, using cash in amounts under AUD10,000. The individual had also employed five other people to purchase silver in structured amounts on his behalf.

Offence
  • Money laundering
  • Structuring
Customer Individual
Industry Bullion
Channel
  • Physical
  • Agent/third party
Jurisdiction Domestic
Designated service Bullion trading
Indicators
  • Cash purchases of bullion
  • Structuring of transactions
  • Use of third parties to conduct transactions

Bullion and money transfer (remittance)


Case 30 - Funds remitted overseas to launder the proceeds of crime

Information was received by a law enforcement agency indicating that between AUD50 million and AUD60 million was laundered by a money exchange business in Sydney. A joint taskforce investigation commenced examining the activities of the operators and directors of this business. The money exchange business was operating an underground banking system which received a large number of 'orders' from associates in South-East Asia via telephone, facsimile, SMS and email. Typically, these orders instructed the money exchange business to deposit money into an Australian bank account. The orders included the bank account number, an account holder's name, a banking branch or financial institution, an amount of Australian currency to be deposited and an exchange rate. If the requested deposit exceeded AUD10,000 it was made as two or more structured deposits to avoid the significant cash transaction reporting threshold.

At least one source of the cash for these deposits came from a person who was arrested and charged in relation to the seizure of over 27 kilograms of ecstasy. The investigation revealed that other sources of cash for the money exchange business included owners and operators of a number of wholesale and retail jewellery businesses. When questioned about these transactions, the business owners and operators provided evasive and untruthful answers about their dealings with the money exchange business. In addition to the jewellery operations in Australia, another business operating in South-East Asia used the remitted funds to purchase precious stones.

Offence Money laundering
Customer
  • Individual
  • Business
Industry
  • Bullion
  • Money transfer (remittance)
Channel Electronic
Jurisdiction International - South-East Asia
Designated service
  • Foreign exchange services
  • Bullion trading
  • Designated remittance arrangement
Indicators
  • Cash purchase of high-value assets (jewellery)
  • Foreign exchange involved in the provision of services, inconsistently with usual business activity
  • Structured deposits

Foreign exchange and gambling


Case 31 - Company directors purchased cash through foreign exchange dealers

An investigation was held into a company allegedly diverting its duty-free exports (mainly cigarettes) to the domestic market. The company was trying to legitimise this activity by creating fictitious sales to ships' crews. Inquiries established that the invoices made out to the crews had been forged. Therefore, excise duty and (GST) had not been paid. The goods had actually been sold in Australia and the profits had not been declared.

AUSTRAC information revealed that the directors of the company were continually purchasing significant amounts (approximately AUD3 million) of foreign currency. This was mainly in United States dollars (USD) purchased from foreign exchange dealers across a variety of suburban bank branches. There were multiple SUSTRs submitted to AUSTRAC concerning this activity, detailing either that the purchasers had refused to sign a significant cash transaction report (SCTR) form in relation to the transaction, or that the value of the USD bought was below the reporting threshold of AUD10,000. One of the individuals concerned, a director of the company, had an extensive gambling history and had transferred substantial funds to Asia.

The resulting investigation into the company led to the issuing of tax and penalties in excess of AUD2.5 million.

Offence Excise evasion
Customer Business
Industry
  • Foreign exchange
  • Gambling
Channel Physical
Jurisdiction Domestic
Designated service
  • Electronic funds transfer
  • Foreign exchange services
Indicators
  • Client has a known or suspected gambling history
  • Company begins transferring funds offshore, inconsistently with its established business pattern
  • Large foreign exchange transactions paid for in cash
  • Refusal to complete required documentation
  • Transactions across multiple foreign exchange outlets in the same geographical location
  • United States dollars purchased in multiple structured amounts

Foreign exchange and motor vehicles


Case 32 - High denomination notes used for drug importation

AUSTRAC provided law enforcement officers with information which was used to identify persons, their aliases and their associates involved in large-scale drug importation and distribution. AUSTRAC assisted in identifying money laundering methods used by the offenders

The offenders purchased euro notes in amounts of EUR500 from a money exchange. It is believed these notes were purchased because they were less bulky when being carried out of Australia by the offenders. In excess of AUD2 million has been identified as being purchased with a view to being carried out of the country over two years by the offenders. The euros were destined for countries in South-East Asia.

The offenders also laundered their illicit funds by purchasing luxury motor vehicles. Financial information identified that a number of persons were purchasing high-value bank cheques for cash, with the cheques payable to the owner of the car dealership. It was ascertained that one offender had been involved in substantial money laundering totalling AUD19 million between 2005 and 2007.

Inquiries further revealed that the principals of the car dealership company were involved in money laundering through the exchange of cash for cheques on payment of a commission. A number of favoured clients paid for luxury cars in cash. Details of vehicle ownership were also concealed to avoid paying luxury vehicle tax.

Offence
  • Drug importation
  • Money laundering
Customer Individual
Industry
  • Foreign exchange
  • Motor vehicles
Channel Physical (face-to-face)
Jurisdiction International - South-East Asia
Designated service
  • Foreign exchange services
  • This case study also details the couriering of cash
Indicators
  • Cash purchase of bank cheques
  • Cash purchase of high-value assets (motor vehicles)
  • Cash purchases of high denomination euro notes

Gambling


Case 33 - Online betting used for money laundering

An online money laundering syndicate actively sought 'customers' by approaching criminal networks and offering to launder their money.

The syndicate involved a number of individuals who used a licensed betting company as a front to accept racing, sporting and entertainment bets by telephone and internet. The betting company's website contained a step-by-step guide to mobile betting, which explained that a link to a mobile betting application could be sent to the customer's mobile phone by submitting their phone number to the website.

The members transferred their funds via charge cards, credit cards and mobile phone payments to a related company, which was based in the Pacific islands to avoid detection by AUSTRAC. The related company then used wire transfers to transfer the funds back to the betting company back in Australia.

AUSTRAC analysis identified four individuals who made multiple funds transfers from various countries, as well as significant cash deposits and withdrawals in an attempt to launder illicit funds. One of the offenders involved in the syndicate sent over AUD337,000 overseas and received international funds transfer instructions (IFTIs) totalling over AUD66,000.

Offence Money laundering
Customer Business
Industry Gambling
Channel Electronic (internet)
Jurisdiction International - Pacific islands
Designated service
  • Gambling services
  • Electronic funds transfer
Indicators
  • Related company is based in offshore jurisdiction
  • Transfer of funds between related companies for non-operational reasons
  • Use of a 'front' company

Gambling and non-bank financial services


Case 34 - Superannuation fund misused for criminal activity

An individual established a self managed superannuation fund. As trustee, he withdrew money from the fund on the pretext of using it for investment purposes. The money, however, was used to support his gambling habit. The individual in question had intended to repay the 'borrowed' funds with a portion of the winnings, but failed to do so.

This example illustrates the potential for superannuation funds to be used for fraudulent purposes or as a pool of funds for further criminal activity.

Offence Superannuation fraud
Customer Business
Industry
  • Gambling
  • Non-bank financial services
Channel Individual
Jurisdiction Domestic
Designated service
  • Gambling services
  • Insurance and superannuation services
Indicators Funds withdrawn from superannuation fund for activities not consistent with established commercial activity

Money transfer (remittance)


Case 35 - Multiple wire transfers used for drug importation

Law enforcement officers investigated a criminal syndicate allegedly involved in the importation of narcotics. Inquiries revealed that the syndicate was sending numerous wire transfers to entities located in a South American country. The activity involved multiple transfers in amounts under AUD10,000 sent by a small group of individuals to another small group of beneficiaries based in South America. Numerous transfers were conducted on the same day by the same person, via various inner-city money remittance outlets. Investigators identified approximately AUD75,000 that was sent in amounts under AUD10,000. Based on the financial activity and the location of the beneficiaries, it was suspected that the funds transfers were drug related.

A joint law enforcement agency investigation resulted in the seizure of a quantity of drugs, drug processing equipment and a large sum of cash. As a result of the investigation, numerous syndicate members were arrested.

Offence Drug importation
Customer Individual
Industry Money transfer (remittance)
Channel Electronic
Jurisdiction International - South America
Designated service Designated remittance arrangement
Indicators
  • Money sent from multiple remitters by the same person in the same geographical location
  • Multiple wire transfers involving a high risk drug country
  • Structuring wire transfers
  • Transactions occurring in a cluster made by the same person

Case 36 - Steroids purchased with low-value wire transfers

A law enforcement agency intercepted vials of steroids being imported into Australia. As investigations progressed it was established that a suspect had purchased the product from abroad and paid for it via small international transfers. The purchase was facilitated through the use of multiple outgoing international funds transfers in amounts of approximately AUD230 directed to Serbia and Montenegro. The transactions were undertaken via money remittance outlets.

The offender was arrested and convicted; however, no jail sentence was imposed.

Offence Drug importation
Customer Individual
Industry Money transfer (remittance)
Channel Electronic
Jurisdiction International - Serbia, Montenegro
Designated service Designated remittance arrangement
Indicators
  • Multiple low-value wire transfers
  • Use of multiple remittance service providers

Money transfer (remittance) and stored value cards


Case 37 - Stored value cards used for money laundering

A group of persons were identified purchasing United States dollar stored value cards from a money remitter in Australia with initial cash payments of between AUD8,000 to AUD9,700. Over the following weeks they returned with further cash to top up the credit on the cards, up to the limit of AUD25,000.

The regularity of the activity through the same location raised suspicion with the money remitter, and the remitter submitted SUSTRs to AUSTRAC detailing the suspicious activities.

Offence Money laundering
Customer Individual
Industry
  • Money transfer (remittance)
  • Stored value cards
Channel Physical (face-to-face)
Jurisdiction Domestic
Designated service
  • Payment orders and stored value cards
  • Designated remittance arrangement
Indicators
  • Cash payments used to top up cards
  • Large amounts of funds placed on stored value cards
  • Purchase of stored value cards in cash amounts just under reporting threshold
  • Regular loading of value onto stored value cards in the same location within a short timeframe and/or in structured amounts

Money transfer (remittance), motor vehicles and real estate


Case 38 - Crime syndicate used money remitter to import drugs

A criminal syndicate's financial activity came to the attention of AUSTRAC after the syndicate members were found to have sent wire transfers to Eastern Europe and the United States in structured amounts under AUD10,000. These transactions were initially conducted through a money remitter in 2005. The transactions were conducted within a short time period, generally in similar amounts, and the total of the transfers amounted to approximately AUD80,000.

Although the composition of the remitter group sometimes changed, there were always sufficiently similar transaction elements to enable law enforcement to keep abreast of the activity.

In 2006 the size of the transactions being sent to Eastern Europe increased substantially with monthly amounts ranging from AUD200,000 to AUD550,000, comprised of multiple transactions each day conducted by a number of ordering customers. The transactions were generally conducted in amounts equivalent to USD10,000, at different locations in adjacent suburbs.

Law enforcement officers in Australia intercepted an importation of cocaine from the United States, allegedly imported by an Eastern European crime syndicate. The joint law enforcement operation resulted in the arrest of two individuals in relation to conspiracy to import cocaine. The proceeds generated from previous drug importations were suspected to have been integrated back into the financial system through the purchase of significant assets including motor vehicles, residential properties and property developments.

Offence Drug importation
Customer Individual
Industry
  • Money transfer (remittance)
  • Motor vehicles
  • Real estate
Channel Electronic
Jurisdiction International - United States, Eastern Europe
Designated service Designated remittance arrangement
Indicators
  • International transfers occur in clusters through remitters
  • Structured wire transfers
  • Transactions across multiple reporting entities in adjacent geographical locations

Money transfer (remittance) and travel products


Case 39 - Non-compliant remittance dealer laundered money for drug trafficking

Investigators identified that a remittance dealer, non-compliant with its obligations under the FTR Act and AML/CTF Act, was laundering proceeds for a drug trafficker. The remittance dealer was accepting large cash deposits in excess of the AUD10,000 reporting threshold and exchanging the cash for American Express traveller's cheques in amounts over AUD10,000. The traveller's cheques were initially issued without being signed. Carbon copies of the sales receipts for the traveller's cheques were completed using false names and non-existent addresses. Documents obtained from subsequent search warrants revealed that the remittance dealer had received several large cash deposits. These deposits had been broken down into smaller amounts when recorded on the company's paperwork in an effort to avoid the requirement to submit a SCTR to AUSTRAC.

Inquiries revealed that the drug trafficker entered into an arrangement with the director of the remittance service to deposit large sums of cash in a manner designed to avoid detection. Prosecutions were launched against the remittance dealer under section 31 of the FTR Act.

The remittance dealer was subsequently convicted and ordered to pay fines of AUD90,000 for structuring offences and a further AUD10,000 for failing to report to AUSTRAC, while the director of the remittance dealership was sentenced to 14 months in prison.

Offence Money laundering
Structuring
Customer Business
Industry
  • Money transfer (remittance)
  • Travel products
Channel Physical (face-to-face)
Jurisdiction Domestic
Designated service Designated remittance arrangement
Indicators
  • Large cash purchases of traveller's cheques
  • Regular large cash deposits

Professional services and real estate


Case 40 - Real estate purchased in false name

A law enforcement agency investigated a matter involving a drug offender growing a large crop of cannabis on a property. When the individual was arrested for this offence, it was established that the person had purchased the block of land under a false name.

Under the provisions of chapter 3 of the Criminal Proceeds Confiscation Act 2002, if the offender had effective control of the land and used that land to produce dangerous drugs, the property was liable for forfeiture. Initial inquiries revealed the property was registered as being owned by a different person. Further inquiries made with another government department revealed the registered owner of the land had the same first names as the offender, but a different surname. The registered land owner's recorded date of birth was also very similar to that of the offender, with the year and month identical, but the day slightly different.

It was alleged the offender had purchased the property under a false name, as no identification was required by the real estate agent to sign the contract. It is further suspected the offender took the contract to a solicitor for conveyancing and had the solicitor sign the transfer documents on the offender's behalf. The sale was executed in 2002, but the final payment not made until 2004. The final payment was made via a solicitor. This payment method was written into the contract.

Offence
  • Fraud
  • Drugs
Customer Individual
Industry
  • Professional services
  • Real estate
Channel Agent/third party
Jurisdiction Domestic
Designated service This case study does not feature a specific designated service under the AML/CTF Act; however, it has been included to highlight the importance of customer identification, particularly in relation to real estate
Indicators
  • Unusual payment arrangement included in the terms of contract
  • Use of false name
  • Use of gatekeepers (solicitor)

Professional services


Case 41 - Tax agent defrauded the Commonwealth

A tax agent was under investigation as he was believed to have defrauded the Commonwealth over a number of years. The agent was found to have submitted nearly 200 income tax assessments for legitimate clients, resulting in refunds of almost AUD2.5 million. However, many of the assessments included false information submitted without the knowledge or consent of the legitimate clients. Approximately 50 unsuspecting clients were involved in the fraud, which resulted in the Commonwealth paying over AUD800,000 in fraudulent claims.

The tax agent had been completing income tax returns for clients, who were then informed of their expected return. What the clients did not realise was that the agent was fraudulently claiming large deductions as part of their returns. The returns were lodged, and the tax refunds made to the agent's trust account. The agent then remitted the legitimate component of the refund to the clients while retaining the fraudulently obtained component.

The tax agent was arrested and charged and proceeds of crime orders issued for over AUD1.5 million.

Offence Fraud
Customer Individual
Industry Professional services
Channel
  • Electronic
  • Individual
Jurisdiction Domestic
Designated service
  • Trust account
  • Electronic funds transfer
Indicators Transactions that do not fit the customer profile

Stored value cards


Case 42 - False identification used to conduct money laundering

An investigation identified an individual as the holder of 12 legitimately issued driver's licences under fictional identities, as well as one licence issued under his real identity. In addition, the individual was identified as being in possession of numerous false identity documents and foreign passports.

When the individual was detained by law enforcement officers he was found to be carrying approximately AUD140,000 in cash generated by criminal activities and 46 stored value cards. A search warrant at a storage unit rented in his name located further stored value cards and gift cards. It was alleged the money was being taken to India for the purposes of money laundering.

It appears that the individual purchased these cards, which are available over the counter at post offices and service stations in values of AUD50 and AUD100. Markings on some of the cards indicated they were valued at AUD500, which suggested that they were purchased online.

Offence Money laundering
Customer Individual
Industry Stored value cards
Channel Physical (face-to-face)
Jurisdiction International - India
Designated service

Payment orders and stored value cards

Indicators

  • Cash purchases of stored value cards and gift cards
  • Purchase of multiple stored value cards
  • Use of false identification documentation
  • Use of internet to purchase stored value cards
Last modified: 08/12/2014 16:15