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Case studies - gambling services

Case 19 - Drug syndicate recruited heroin couriers from casino

A law enforcement investigation into a suspected drug importation syndicate led to the arrest of a number of suspects and the seizure of a large amount of cash and commercial quantity of drugs.

The investigation identified a syndicate using couriers to import high-grade heroin from Vietnam. The couriers were all members of the same community who were recruited by contacts at casinos and coerced into becoming couriers to pay their significant gambling debts.

The suspects were the subject of a number of suspicious transaction reports (SUSTRs) submitted to AUSTRAC by a casino due to a spike in their gambling activity. AUSTRAC also received significant cash transaction reports (SCTRs) detailing AUD710,000 worth of gambling activity by the suspects and reports of international funds transfers (IFTIs) to Vietnam worth AUD18,000.

As a result of the investigation, the suspects were charged with drug trafficking, conspiracy to traffic drugs and importation of drugs.

Offence

Drug importation; drug trafficking

Customer Individual
Industry Gambling; remittance services
Report type IFTI; SCTR; SUSTR
Channel Agent/third party; electronic; physical
Jurisdiction International - Vietnam
Designated service

Gambling services; remittance services (money transfer)

Indicators

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 of interest to authorities

Use of cash couriers †

Use of third parties to conduct transactions

† 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


Case 20 - Drug trafficker caught after suspicious casino behaviour reported to AUSTRAC

AUSTRAC alerted a law enforcement agency to a series of suspicious transactions at a casino, sparking an investigation that led to the arrest of several members of a crime syndicate and the seizure of cash and a large, commercial quantity of drugs.

One of the suspects triggered an alert in the AUSTRAC database after his gambling activities at a casino prompted the submission of a large number of significant cash transactions reports (SCTRs). Over a 12-month period, AUSTRAC also received a large number of suspicious transaction reports (SUSTRs) detailing the suspect's continual purchase of bank cheques. Other SUSTRs detailed the suspect's significant cash buy-ins at the casino*.

AUSTRAC information also assisted authorities to identify the probable money laundering methods used by the crime syndicate. The syndicate's illicit funds were sent overseas and then returned to Australia through legitimate channels as 'clean' funds. The funds were returned to Australia as seemingly legitimate proceeds from the sale of property or as gifts from overseas family members.

All suspects involved in the case were charged with trafficking a commercial quantity of cocaine, and one offender faced an additional charge of possessing the proceeds of crime.

Offence Drug trafficking; possessing the proceeds of crime
Customer Individual
Industry Gambling
Report type SCTR, SUSTR
Channel Physical
Jurisdiction Domestic
Designated service Gambling services
Indicators

Large cash buy-in at casinos

Multiple purchases of bank cheques

Outgoing international funds transfer with corresponding incoming funds transfer - appears to be a 'u-turn' transaction†

Unusual customer behaviour at a casino

* See Glossary for explanation of chip cash-outs and chip buy-ins.
† See Glossary for explanation of a 'u-turn' transaction.

Flow diagram for Case Study 20. Drug trafficker caught after suspicious casino behaviour reported to AUSTRAC.


Case 21 - Tax fraudsters used casinos, businesses to launder funds

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.

* See Glossary for explanation of chip cash-outs and chip buy-ins.

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

* See Glossary for explanation of chip cash-outs and chip buy-ins.

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

Last modified: 28/11/2014 16:40