Case studies - remittance services (money transfer)

Case 23 - Airline pilots suspected of smuggling $10 million of drug money to Vietnam

A money laundering syndicate was suspected of using airline pilots and crew to smuggle millions of dollars worth of cash out of Australia to Vietnam. Authorities suspect that the money was the proceeds of drug sales in Australia and payments for drugs imported into Australia.

The cash was given to the pilots by owners of several remittance service businesses, and authorities suspect the money laundering network used pilots to smuggle more than AUD10 million from Australia to Vietnam over an 18-month period.

Searches of AUSTRAC's information database identified that one of the suspect Vietnamese pilots had previously declared AUD19,000 on an international currency transfer report (ICTR). Since that declaration, the pilot had made no further reports of currency being carried into or out of Australia.

The suspect pilot was arrested after attempting to smuggle AUD500,000 out of Australia without declaring it. He pleaded guilty to charges of money laundering under the Criminal Code Act 1995 and was subsequently jailed for four-and-a-half years for smuggling a total of AUD6.5 million out of Australia.

Offence Drug trafficking; money laundering
Customer Business; individual
Industry Remittance services
Report type ICTR
Channel Agent/third party; physical
Jurisdiction International - Vietnam
Designated service Remittance services (money transfers)
Indicators

Use of cash couriers †

Use of third parties to carry cash

† 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.

Flow diagram for Case Study 23. Airline pilots suspected of smuggling $10 million of drug money to Vietnam.


Case 24 - Mexicans arrested after 64kg cocaine importation thwarted

A joint international law enforcement investigation led to the arrest in Melbourne of three Mexican citizens attempting to import 64 kilograms of cocaine into Australia. The cocaine is believed to have originated in South America and was transported through the United States en route to Australia.

The criminals attempted to make the shipment appear legitimate by establishing a front company and concealing the cocaine inside cement cylinders, flower pots and statues, each weighing 210 kilograms.

The sophistication of the smuggling network, rather than the size of the shipment, suggested that a high-level criminal network was involved in the operation.

Considering the size of the operation, there was minimal financial transaction activity involved in the importation. AUSTRAC information indicated the following transactions had taken place:

  • a number of outgoing international funds transfer instructions (IFTIs) from one suspect in Australia to another in Mexico, usually in amounts of less than AUD1,000
  • incoming IFTIs, worth a total of AUD5,716, from a suspect in Mexico to another suspect in Australia. This amount was split between three transactions, all of which were undertaken on the same day.

The international law enforcement investigation ultimately resulted in the disruption of a transnational drug trafficking syndicate and prevented an estimated AUD16 million worth of cocaine from being distributed on Australia's streets. Three people were charged with attempting to import and conspiracy to import a commercial quantity of a border controlled drug contrary to section 307.1 of the Criminal Code Act 1995.

Offence Drug importation
Customer Individual
Industry Remittance services
Report type IFTI
Channel Electronic
Jurisdiction International - Mexico, the United States
Designated service Remittance services (money transfers)
Indicators

International funds transfers to high-risk drug jurisdiction (Mexico)

Multiple low-value international funds transfers

Same day transactions

Use of a front company


Case 25 - Accountant committed fraud after falling for Nigerian scam

AUSTRAC received 40 suspect transaction reports (SUSTRs) detailing the fraudulent activities of an accountant, who authorities believe may have fallen victim to a Nigerian fraud scheme.

The suspect sent funds to Nigeria using international funds transfers (IFTIs) conducted through various money transfer agencies. The transfer amounts varied considerably, but were generally in amounts of less than AUD10,000. The suspect sometimes travelled long distances from her home to conduct the funds transfers.

Over a three-year period the suspect sent IFTIs worth approximately AUD900,000 to more than 100 different beneficiaries in several countries, with the majority of the transfers sent to Nigeria, Hong Kong, the United Kingdom and Singapore. During this period, the suspect also made several significant cash withdrawals, worth AUD120,000.

The resultant law enforcement investigation found that, after having fallen victim to the overseas scam, the suspect had allegedly committed a number of frauds herself to fund her international funds transfers to the fraudsters. It appears she also may have induced other people to send money to the fraudsters, although it was not established whether she profited from these transfers.

Offence Fraud
Customer Individual
Industry Remittance services
Report type IFTI; SUSTR
Channel Electronic
Jurisdiction International - Hong Kong, Nigeria, Singapore, United Kingdom
Designated service Remittance services (money transfers)
Indicators

Customer undertaking transactions that appear to be inconsistent with their profile and/or transaction history:

  • multiple outgoing international funds transfers below AUD10,000
  • large cash withdrawals
  • transactions conducted in various geographical locations

International funds transfers to a high-risk fraud destination (Nigeria)


Case 26 - Police intercept $450 million ecstasy shipment

A criminal syndicate became the focus of a joint law enforcement investigation after it was suspected of having imported a commercial quantity of ecstasy into Australia from Italy.

Law enforcement officers identified and seized a shipping container which was found to contain approximately 4.4 tonnes of ecstasy tablets, with an estimated street value of AUD455 million.

Authorities suspected that the criminal syndicate responsible for the attempted importation included high-ranking Australian organised crime figures, who were also suspected of being involved in other large-scale importations of various drugs, particularly cocaine.

Investigators suspected that five separate organised crime syndicates were working cooperatively to import drugs into Australia. These organised crime groups were from Italy, the Netherlands, Eastern Europe and South America, and some were involved in the production of ecstasy and cocaine, allowing them to supply multi-tonne consignments of drugs.

Authorities identified 26 main suspects in Australia, with an additional four suspects in Belgium and one in the Netherlands. A principal member of the Australian syndicate was suspected to have been a member of the Calabrian mafia and had extensive criminal associations in Italy, South America and the Netherlands.

This investigation identified Australian-based syndicate members responsible for laundering money on behalf of local and international groups through the use of cuckoo smurfing (see text box below) by remittance dealers in Singapore. These Singapore-based associates also directly participated in the laundering of funds from Australia to Europe. It is estimated that AUD10 million was laundered from Australia using the method of cuckoo smurfing, although authorities suspect this figure may be higher.

AUSTRAC provided significant financial intelligence support to the investigating law enforcement agencies, including a number of financial intelligence assessment reports. AUSTRAC information also included more than 50 suspicious transaction reports (SUSTRs) detailing the money laundering activities of one suspect, which included account deposits worth more than AUD500,000.

As a result of this extensive investigation, law enforcement agencies seized numerous properties and vehicles, as well as cash, from the suspects. Members of the syndicate were charged with conspiracy to import ecstasy, trafficking ecstasy, importing cocaine, conspiracy to import precursor drugs (which are used in the manufacture of illegal drugs), and laundering more than AUD1 million.

Offence Drug importation; money laundering
Customer Individual
Industry

Banking (ADIs); remittance services

Report type SUSTR
Channel Electronic
Jurisdiction International - Eastern Europe, Italy, the Netherlands, Singapore, South America
Designated service Remittance services (money transfers); account and deposit-taking services
Indicators

Multiple cash deposits into different accounts

Third party cash deposits into several different accounts (with varying amounts) conducted on the same day

Use of international remitter†

† 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.

Cuckoo smurfing

This sophisticated money laundering technique involves the overseas transfer of criminal funds through the accounts of unwitting third parties.

Cuckoo smurfing requires the coordination of two complicit remittance dealers in different countries - the remitters arrange for illicit funds to be deposited into the accounts of innocent third parties who are expecting overseas remittances.

The third party accesses and uses the illicit funds, assuming they are legitimate funds remitted from overseas - the illicit funds are thus integrated into the legitimate economy. Subsequently, the criminals retrieve from the complicit overseas remittance dealer the legitimate funds (which were originally meant to have been sent to the innocent third party).


Case 27 - Gambling debts drove drug couriers to smuggle heroin

Law enforcement officers commenced a joint agency investigation into a Vietnamese syndicate suspected of using drug couriers ingesting heroin to smuggle it into Australia.

The main suspect of the syndicate came to the attention of law enforcement officers during a previous law enforcement operation against her associates. These associates had been charged with drug trafficking and importation after also using couriers who had ingested drugs.

The heroin was purchased in Vietnam with funds remitted via remittance dealers serving Vietnamese communities in Australia. The couriers were then flown to Vietnam to make the return journey with the drugs concealed internally.

The joint law enforcement investigation led to the arrest of the main suspect, as well as six couriers recruited in Melbourne - it is suspected that some of the couriers may have been coerced into trafficking drugs because they owed gambling debts.

The main suspect was a partner in a business that used a cheque cashing service to pay staff wages, and she had been using the cheque cashing service to help fund the heroin purchases.

The suspect was charged with importing and trafficking commercial quantities of heroin and crystal methamphetamine hydrochloride ('ice').

Offence Drug importation
Customer Individual
Industry Remittance services
Report type IFTI
Channel Agent/third party; physical
Jurisdiction International - Vietnam
Designated service Remittance services (money transfers)
Indicators

Business undertaking transactions that appear to be inconsistent with its profile and/or transaction history:

  • international funds transfers to a country of interest to authorities
  • multiple cashing of cheques
  • use of cheque cashing service to cash business cheques

Use of third parties


Case 28 - Remittance dealer laundered drug money for Middle Eastern crime gang

AUSTRAC information assisted law enforcement officers investigating a Sydney-based family and their associates who were suspected of engaging in criminal activities.

AUSTRAC disseminated 14 financial intelligence assessments and numerous suspect transaction reports (SUSTRs) to law enforcement partner agencies detailing the activities of the criminal network.

The SUSTRs included details of cash being deposited into an account in one state and then being withdrawn shortly after from an interstate location. The syndicate also made significant cash withdrawals and deposits. Furthermore, there were a number of international funds transfers in and out of Australia, with the majority of funds being transferred into Australia. This information proved valuable to the investigators in helping to clarify the size and structure of the network.

The investigation focused on a particular remittance dealer who was suspected to have remitted funds to Lebanon on behalf of Middle Eastern organised crime groups. Authorities also alleged that the remittance dealer had a reputation within his community as someone who could transfer funds out of Australia without the transfers coming to the attention of law enforcement agencies or AUSTRAC.

As the law enforcement investigation progressed, it identified a second money laundering syndicate operating predominantly through a casino.

Law enforcement officers conducted a series of raids across Sydney and Melbourne, and ten men were arrested for alleged involvement in trafficking AUD250,000 worth of cocaine, ice and cannabis from NSW to Victoria.

Offence Drug trafficking; money laundering
Customer Individual
Industry Gambling; remittance services
Report type IFTI; SCTR; SUSTR
Channel Physical - face-to-face
Jurisdiction International - Lebanon
Designated service Remittance services (money transfers); gambling services
Indicators

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

International funds transfers to a country of interest to authorities

Multiple international funds transfers below AUD10,000


Case 29 - Elderly couple sent $500,000 to overseas scammers

AUSTRAC alerted a law enforcement agency to a number of suspicious international funds transfers made by an elderly Australian couple to various overseas recipients. Over a six-month period the couple used a money transfer agency to send AUD512,000 overseas, including to the United Kingdom, Ghana, Hong Kong and Ivory Coast.

Law enforcement officers visited the couple in relation to the following money transfers:

  • Ghana - the couple told the officers they had befriended a woman on the internet, who in correspondence referred to the couple as 'mother' and 'father'. In response to her requests, the couple sent money to the woman to assist her with food, rent and other expenses. The couple believed that the woman eventually wanted to move to Australia. In addition, the husband had travelled to Ghana to meet the woman, and arranged to pay USD20 per day for the storage of the woman's family treasure chest.
  • United Kingdom - the couple sent funds to a recipient in London as part of what was subsequently revealed to be an 'inheritance' scam (a variation on the 'advance fee fraud' scam - see text box adjacent).
  • Hong Kong - the couple sent AUD57,000 to an overseas recipient, also part of an inheritance scam.
  • Ivory Coast - the couple had befriended a girl whose parents had been killed, and provided her with financial assistance for food and accommodation. They believed that she, too, wanted to move to Australia.

Subsequently, AUSTRAC informed authorities that the couple were continuing to send money overseas. The couple sent a further AUD60,000 overseas even after being warned by law enforcement officers that their overseas recipients were most likely international fraudsters.

Offence Fraud
Customer Individual
Industry Remittance services
Report type IFTI
Channel Electronic
Jurisdiction International - Ghana, Hong Kong, Ivory Coast, United Kingdom
Designated service Remittance services (money transfers)
Indicators

Customer undertaking transactions that appear to be inconsistent with their profile and/or transaction history:

  • multiple international funds transfers to countries of interest to authorities

Advance fee fraud and inheritance scams

Advance fee fraud scams are generally spread via unsolicited emails, or conducted in conjunction with friendship or dating scams. A typical scam unfolds like this:

  • The scammer emails the intended victim, claiming to be a representative of an overseas government agency or a solicitor.
  • The scammer asks for the victim's assistance in moving a substantial sum of money out of their country, often claiming that the money is trapped in banks due to civil wars or government restrictions.
  • The scammer advises that they intend to forward the money to the victim's bank account, and that the victim will retain 10 to 20 per cent of the funds as payment for their assistance.
  • However, the scammer informs the victim that, before they can transfer the funds, the victim will first need to pay various 'transfer costs', such as the cost of anti-terrorist certificates, taxes or storage expenses.
  • The victim pays the transaction costs as instructed by the scammers - the victim's money and the scammers disappear and the scam is complete.

The typical 'inheritance' scam uses similar methods. The scam spreads via email or through 'friendship' connections, and begins by claiming that the intended victim is due to receive a massive, unexpected inheritance from an overseas benefactor. However, before the victim can receive their 'inheritance', they must first transfer funds to cover the various transaction fees (as described above) involved in the inheritance.

Last modified: 28/11/2014 16:48