Appendix A - Indicators of potential money laundering/terrorism financing activity
There are numerous indicators which may act as 'red flags' for reporting entities to identify potential money laundering or terrorism financing activity.
Although a single indicator does not necessarily indicate illicit activity, the existence of a 'red flag' indicator should encourage further monitoring and examination. In most cases it is the existence of multiple indicators that raises a reporting entity's suspicion of potential criminal activity, and influences their response to the situation.
AML/CTF officers should include these money laundering/terrorism financing indicators in staff training, and encourage their staff to use these indicators when describing suspicious behaviours for inclusion in suspect transaction or suspicious matter reports.
Money launderers and terrorism financiers will continuously look for new techniques to obscure the origins of illicit funds and lend their activities an appearance of legitimacy. AML/CTF officers should continually review their products, services and individual customers to ensure their internal AML/CTF systems and training are effective.
The list below features indicators which appear within the case studies of this report, and should be treated as a non-exhaustive guide.
- business undertaking transactions that appear to be inconsistent with its profile and/or transaction history
- cash deposits made to an account in one location, only for the funds to be withdrawn in a different location a short time later
- cash payments for international funds transfers
- cash withdrawals conducted at various bank branches on the same day
- co-mingling of illicit funds with legitimate sources of income†
- common addresses provided for funds transfers conducted by different people
- consecutive cash withdrawals below AUD10,000
- customer refuses to complete the documentation required to complete the transaction
- customer undertaking transactions that appear to be inconsistent with their profile and/or transaction history
- increase in gambling activity
- international funds transfers to a country/jurisdiction of interest to authorities (e.g. a high-risk drug/fraud jurisdiction)
- large cash deposits
- large cash deposits to company account
- large cash withdrawals
- large casino chip buy-ins/cash-outs
- large international funds transfers
- large withdrawal using a bank cheque
- multiple ATM withdrawals
- multiple cash deposits
- multiple cash deposits and withdrawals below AUD10,000
- multiple cash deposits at different banks/into different accounts
- multiple cash deposits at different banks, rapidly followed by outgoing international funds transfers
- multiple cash withdrawals from accounts
- multiple cashing of cheques
- multiple customers conducting international funds transfers to the same overseas beneficiary
- multiple deposits below AUD10,000
- multiple funds transfers below AUD10,000
- multiple high-value international funds transfers
- multiple international funds transfers below AUD10,000
- multiple low-value international funds transfers
- multiple overseas customers transferring funds into the same Australian account
- multiple purchases of bank cheques
- multiple visits to currency exchange businesses to purchase travellers cheques
- outgoing international funds transfer with corresponding incoming funds transfer - appears to be a u-turn transaction*
- purchase of a bank draft with bank cheque
- purchase of high-value assets (jewellery, motor vehicles, real estate)
- purchase of high-value assets with cash and company cheques
- purchase of multiple travellers cheques
- purchase of multiple travellers cheques below AUD10,000
- purchasing gaming chips for a third party
- same day transactions conducted at different bank branches
- significant deposits into personal account from an apparently unrelated company
- structuring of cash deposits
- structuring transactions to avoid reporting requirements
- third party cash deposits into several different accounts (with varying amounts) conducted on the same day
- transactions conducted in various geographical locations
- unusual customer behaviour at a casino
- use of front companies
- use of trust accounts to conduct international funds transfers
- use of cash couriers
- use of cheque cashing service to cash business cheques
- use of false documentation/identification
- use of false invoices
- use of international remitter †
- use of overseas bank accounts
- use of third parties to carry cash
- use of third parties to conduct funds transfers/transactions
- use of third party accounts
* See Glossary for an explanation of a 'u-turn' transaction.
† While this particular customer behaviour may not be directly observable by reporting entities, it is an activity commonly used to facilitate or hide money laundering and other offences.
Appendix B - Further information on money laundering/terrorism financing typologies
International AML/CTF organisations
- Financial Action Task Force (FATF)
- Asia/Pacific Group on Money Laundering (APG)
- Egmont Group of Financial Intelligence Units
FATF typologies work
The FATF and APG conduct annual typologies exercises, which include active participation by their respective members. Each organisation publishes an annual typologies report which focuses on recent money laundering and terrorism finding methodologies identified by their members.
The FATF also publishes a series of reports on money laundering risks and threats in specific sectors. Recent reports in this series include:
- money laundering and terrorist financing in the securities sector
- money laundering in the football sector
- vulnerabilities of casinos and the gaming sector
- money laundering and terrorist financing vulnerabilities of commercial websites and internet payment systems
- misuse of corporate vehicles including trust and company service providers
- trade-based money laundering.
Australian Crime Commission
In 2009, the Australian Crime Commission published its Organised Crime in Australia 2009 report, the second report in a series.
This report endeavours to provide a current picture of organised crime in Australia, including the efforts being made by law enforcement agencies in disrupting and dismantling organised crime groups.
The report highlights the increasingly widespread criminal involvement in money laundering and its affect on the Australian community.
The report is available at the Australian Crime Commission's website.
Australian Institute of Criminology
The Australian Institute of Criminology is Australia's national research and knowledge centre on crime and justice and undertakes research into various issues in order to reduce crime and promote justice.
Two publications recently published by the AIC provide further information on money laundering and terrorism financing:
- Transnational crime brief no. 7, Risks of money laundering and the financing of terrorism arising from alternative remittance systems, which was released in April 2010
- Challenges in dealing with politically exposed persons report, published in February 2010 as part of its ongoing Trends & issues in crime and criminal justice series.
The AIC also published its Money laundering risks of prepaid stored value cards report in 2008. This report examines the ways criminals use prepaid stored value cards to keep the proceeds of crime and move them across borders without alerting law enforcement and financial intelligence units.
All of the above publications are available on the AIC's website.