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Case studies - Account and deposit-taking services

Contents


Case 1 – Suspect used black market website and digital currencies for drug trafficking

AUSTRAC assisted an investigation which led to the arrest of a suspect who used a digital currency to purchase, import and sell illicit drugs through a black market website.

The suspect was sentenced to three years and six months imprisonment and fined AUD1,000 for possessing controlled weapons.

Law enforcement intercepted a number of packages sent to Australia from Germany and the Netherlands via the postal system. The packages were addressed to the suspect. Authorities found that the packages contained cocaine and methylenedioxymethamphetamine (MDMA), with a combined weight of 60 grams.

AUSTRAC information identified that the suspect had sent funds to a digital currency exchange to purchase a digital currency. Analysis of AUSTRAC information showed that over a six-month period the suspect undertook 13 outgoing international funds transfer instructions (IFTIs) totalling approximately AUD28,000. The funds were transferred via banks to an online digital currency exchange based overseas (1). The payments enabled the suspect to purchase an amount of digital currency.

AUSTRAC information showed that the suspect gradually increased the value of IFTIs sent to the digital currency exchange from approximately AUD600 to AUD3,500 per transaction over the six-month period. The suspect also received two incoming IFTIs totalling approximately AUD2,000 from the same online digital currency exchange.

Law enforcement executed a search warrant on the suspect's home and seized a quantity of illicit drugs including cannabis, MDMA, cocaine, amphetamine and methylamphetamine. Additionally, law enforcement seized a number of items associated with drug trafficking, namely digital scales, clip seal bags and a money counter. Authorities also seized approximately AUD2,300 cash, computers, mobile phones and a number of stun guns.

Computers and mobile phones revealed drug trafficking

Analysis of the suspect's mobile phones identified text messages that suggested the suspect was trafficking drugs. On one phone law enforcement identified 150 such messages sent during the week prior to the suspect's arrest.

Analysis of the suspect's computers revealed that he registered an online account with a black market website. The website allows users to purchase and sell illicit goods and conduct transactions using a digital currency. The use of digital currencies provides a degree of anonymity for users. The suspect used this online account to purchase, import and sell illicit drugs.

The suspect was convicted of two charges of importing a marketable quantity of a border controlled drug and one charge of trafficking a controlled drug contrary to the Criminal Code Act 1995. He also pleaded guilty to possessing a controlled weapon contrary to the Control of Weapons Act 1990.

The suspect was sentenced to three years and six months imprisonment. He was also fined AUD1,000 for possessing controlled weapons.

Offence

  • Drug importation
  • Drug trafficking

Customer

  • Individual
  • Business

Industry

Banking (ADIs)

Channel

Electronic

Report type

IFTI

Jurisdiction

  • Domestic
  • International

Designated service

Account and deposit-taking services

Indicators

  • Increase over time in the value of transactions with a digital currency exchange
  • Multiple low-value international funds transfers

Digital currencies and the regulated AML/CTF sector

Financial activity relating to the use of digital currencies may be indirectly visible to AUSTRAC via the regulated sector. For example, when digital currency-related transactions intersect with the mainstream regulated AML/CTF sector they can generate reportable transactions such as:

  • reports of IFTIs between Australian accounts and foreign accounts for the purchase/sale of digital currencies
  • threshold transaction reports (TTRs) for cash deposits/withdrawals of AUD10,000 or more involving the bank accounts of digital currency exchange providers
  • suspicious matter reports (SMRs) submitted where reporting entities consider financial activity involving a digital currency exchange to be suspicious.

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Case 2 – Mothballed cash stash led to drug trafficker's arrest

AUSTRAC intelligence assisted law enforcement with an investigation into drug trafficking. The suspect was charged with attempting to traffic a controlled drug and sentenced to two-and-a-half years imprisonment.

AUSTRAC disseminated an intelligence assessment report to law enforcement regarding the financial activities of a suspect attempting to launder the proceeds of crime raised through drug-related activity. The suspect used bank and casino accounts to launder the funds.

The suspect was the subject of five suspicious matter reports (SMRs) submitted to AUSTRAC. Over a four-day period the suspect made five structured cash deposits of between AUD8,000 and AUD9,000 into his personal bank account (2). The structured cash deposits totalled AUD41,500. Bank staff reported in the SMRs that the deposited cash smelled of mothballs. After the deposits, the suspect undertook a domestic electronic transfer to move AUD40,000 from his bank account into an account with an Australian casino. The suspect deposited an additional AUD40,000 cash directly into the casino account.

An additional SMR submitted by the bank reported that the suspect received a deposit via domestic electronic transfer of AUD131,000 from the casino. Following this deposit into his bank account, the suspect withdrew AUD9,000 in cash.

The casino submitted an SMR indicating that the suspect was known by two aliases and that he would become aggressive when casino staff requested identification as part of the casino's normal identification procedures for customers cashing out gaming chips. The casino also reported that the suspect was known to cash out chips in amounts under the AUD10,000 cash reporting threshold, presumably to avoid the requirement to present identification to staff.

The suspect was arrested at a domestic Australian airport after a drug detector dog reacted to his suitcase. The suitcase contained 10 vacuum-sealed plastic bags containing a total of 4.5 kilograms of cannabis. The suspect was charged with attempting to traffic a controlled drug, contrary to sections 11.1 and 302.4 of the Criminal Code Act 1995 and was sentenced to two-and-half years imprisonment.

Offence

Drug trafficking

Customer

Individual

Industry

  • Banking (ADIs)
  • Gambling services

Channel

  • Electronic
  • Physical

Report type

SMR

Jurisdiction

Domestic

Designated service

  • Account and deposit-taking services
  • Gambling services

Indicators

  • Cash has a distinct or unusual odour
  • Customer unwilling to produce identification when requested by reporting entity staff
  • Structuring of multiple cash deposits below AUD10,000 to avoid reporting obligations
  • Structuring of gaming chip cash outs to avoid reporting obligations
  • Use of false identification

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Case 3 – Suspect jailed after forcing trafficking victims to work in Australian brothels

AUSTRAC information contributed to a law enforcement investigation into a syndicate involved in the trafficking of women from Thailand to Australia. The suspect pleaded guilty to conducting a business involving sexual servitude and making a false statement to an immigration official.

The suspect was sentenced to two years and three months imprisonment.

The syndicate used a bank account to conduct a range of transactions to facilitate the trafficking. The investigation ultimately disrupted the Australia-based syndicate.

Australian law enforcement identified an Australia-based suspect who organised for foreign women to work in brothels in Australia. The suspect organised the placement of 11 women in brothels, where they were forced to work to pay off a large debt owed to the suspect. They incurred the debt in return for being brought to Australia.

A broker recruited the women in Thailand and organised passports, visas and other travel arrangements. Each of the women agreed to repay a 'debt' of approximately AUD53,000 after arriving in Australia. Some of the women were made aware that they would be working in the sex industry, while others were misled as to the nature of the work they would be required to perform.

Each Australian brothel deducted its fee and paid the remainder of the earnings to the women. The women used these funds to repay their debt to the suspect by transferring funds electronically into the suspect's bank account or by depositing cash into the suspect's account. In the case of one brothel, the repayments were made by giving cash directly to the suspect.

At the request of the law enforcement agency, AUSTRAC produced financial intelligence assessments which analysed various aspects of the suspect's financial activities.

AUSTRAC identified that:

  • the suspect used aliases and variations of her address when conducting transactions
  • significant cash transaction reports (SCTRs) revealed the suspect had withdrawn AUD53,000 cash from a bank account over a one-month period
  • over an eight-year period the suspect, using her own name and a number of aliases, sent 90 international funds transfer instructions (IFTIs) to individuals in Thailand, totalling approximately AUD455,000.

Analysis of AUSTRAC information identified an individual in Thailand who was suspected of being a broker who arranged the trafficking of women from Thailand into Australia as part of the sexual servitude syndicate.

Over a 12-month period the suspect in Thailand received 37 IFTIs from Australia totalling approximately AUD320,000. The IFTIs were made through banks and were sent by Australia-based employees of the main suspect in Australia, as well as the 11 women. The IFTIs showed the women shared common addresses. Authorities suspect the cash payments were structured into amounts of less than AUD10,000 to avoid the cash transaction reporting threshold. AUSTRAC disseminated information to a Thai law enforcement agency to assist its investigations into the syndicate's operations in Thailand.

On average, it took approximately six months for each woman to pay off their debt to the suspect. Enquiries revealed that of the AUD53,000 each woman was required to pay back to the suspect, the broker in Thailand was paid AUD20,000. The main suspect made a profit of approximately AUD10,000 to AUD18,000 per woman.

As part of the arrangement, after the women arrived in Australia the suspect assisted them to apply for a protection visa. To substantiate a claim for refugee status the suspect provided the women with false information about the conditions they had each experienced in their home country. The suspect also coached the women on how to answer questions from Australian authorities about their visa application.

The suspect pleaded guilty to:

  • conducting a business involving sexual servitude over a three-year period contrary to section 270.6(2) of the Criminal Code Act 1995
  • making a false statement to an immigration official in connection with an application for a protection visa contrary to section 234(1)(b) of the Migration Act 1958.

The suspect was sentenced to two years and three months imprisonment.

Offence

  • People trafficking
  • Sexual servitude

Customer

Individual

Industry

Banking (ADIs)

Channel

Electronic

Report type

IFTI

Jurisdiction

International - Thailand

Designated service

Account and deposit-taking services

Indicators

  • International funds transfers to a country of interest to authorities
  • Large cash withdrawals within a short time frame
  • Multiple customers linked by common addresses, conducting international funds transfers to the same overseas beneficiary
  • Multiple international funds transfers below AUD10,000

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Case 4 – People smuggling operation shut down by joint Australian–Indonesian investigation

A joint investigation between Australian and Indonesian authorities identified two Australian suspects (a father and son) who were facilitating a people smuggling venture. AUSTRAC analysis of financial transaction reports assisted the investigation. Authorities restrained approximately AUD60,000 as the proceeds of crime.

The main suspect was sentenced to a suspended nine-month jail sentence.

Australian authorities alleged that approximately 70 foreign nationals had paid the two suspects to facilitate their passage from Indonesia into Australia. The voyage was not undertaken due to intervention by Indonesian police. The father, suspect A, was identified as a people smuggler operating in Indonesia and Malaysia.

Suspect A originally arrived in Australia as an asylum seeker and was granted a visa. Suspect A was linked to numerous Afghan nationals who were detained in Indonesia and Christmas Island. Suspect A travelled to Pakistan, Malaysia and Indonesia and was approached by Afghan nationals to arrange their safe passage to Australia. The Afghan nationals were willing to pay between AUD8,000 and AUD10,000 each for the journey.

Suspect B assisted his father (suspect A) to transfer funds relating to the people smuggling operation. In Indonesia the foreign nationals paid cash up-front before being transported to Australia. Some of the funds were sent to Australia. Money was also sent from Australia to Indonesia to assist the suspects' people smuggling associates in Indonesia.

Over a two-month period, three suspicious matter reports (SMR) were submitted by reporting entities which identified the following:

  • While in Australia, suspect B received multiple incoming international funds transfer instructions (IFTIs) from suspect A in Indonesia. The transfers appeared to be deliberately structured (3) into amountsbelow AUD10,000.
  • Suspect A provided multiple, conflicting identification details when sending separate IFTIs from Indonesia to Australia.
  • Suspect B received significant cash deposits into his personal account from multiple third parties in different Australian states.
  • Suspect B transferred approximately AUD40,000 from his personal everyday account to his debit card account via internet banking. On the same day suspect B conducted three significant cash withdrawals from the debit card account in amounts of AUD10,000, AUD20,000 and AUD10,000. These cash withdrawals were made at three different bank branches in a major metropolitan area.
  • On a separate occasion, suspect B attempted to withdraw a significant amount of cash. Upon being questioned by the branch manager regarding the purpose of the funds suspect B provided conflicting information and then became irate. Suspect B did not withdraw the funds and proceeded to close all accounts at this major bank.  

AUSTRAC staff analysed financial transaction reports submitted by reporting entities and identified the following:

  • Over a one-month period suspect B conducted one cash deposit of AUD11,000 and five cash withdrawals in amounts between AUD5,000 and AUD20,000. Suspect A also conducted one cash deposit of AUD13,000.
  • Over a six-day period suspect A used remittance services in Indonesia to transfer approximately AUD40,000 to suspect B in Australia in amounts between AUD1,900 and AUD7,600.
  • Over an eight-month period suspects A and B conducted 10 outgoing IFTIs from Australia to Indonesia. The suspects used the remittance services to transfer the funds to third-party accounts and accounts held in their names in amounts between AUD150 and AUD5,000.

Both suspects were charged with people smuggling and money laundering offences, and suspect B was charged with possessing a drug of dependence. Suspect A did not face trial. Authorities restrained as the proceeds of crime approximately AUD60,000 held in a bank account operated by suspect A's daughter. Suspect B was sentenced to a suspended nine-month jail sentence after pleading guilty to receiving and dealing with money from the proceeds of crime.

Offence

  • Money laundering
  • Fraud
  • People smuggling

Customer

Individual

Industry

  • Banking (ADIs)
  • Remittance services

Channel

  • Electronic
  • Physical

Report type

  • SCTR
  • IFTI
  • SMR

Jurisdiction

  • Domestic
  • International – Indonesia

Designated service

  • Account and deposit-taking services
  • Remittance service (money transfers)

Indicators

  • Conflicting or incomplete identification details provided for different transactions
  • Customer becomes irate when questioned over financial transactions
  • Customer undertaking transactions that appear to be inconsistent with their customer profile and transactional history
  • International funds transfer from an individual account to several offshore accounts held in the names of third parties
  • International funds transfer to high-risk jurisdictions
  • Large cash withdrawals from multiple bank branches on the same day
  • Structured international funds transfers within a short period of time
  • Use of overseas bank accounts

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Case 5 – AUSTRAC data helped capture international cybercriminal

Suspicious matter reports submitted to AUSTRAC led to the arrest of an international fugitive wanted for cybercrime and fraud offences. The suspect pleaded guilty to conspiracy to commit bank fraud, conspiracy to commit money laundering and computer fraud.

The suspect was sentenced to five years and 10 months imprisonment and also agreed to assist United States authorities to recover the stolen funds.

The suspect was an international fugitive who was wanted in the United States for cybercrime and fraud-related offences. United States authorities alleged that the suspect was part of an organised crime group that stole more than USD30 million from United States victims through an elaborate home equity line-of-credit fraud (4). United States authorities seeking the suspect's arrest published information about him online to alert the public and international authorities.

Australian authorities analysed three SMRs submitted by reporting entities, which included detailed information about multiple aliases used by the suspect. The SMRs prompted AUSTRAC to conduct further analysis, which ultimately assisted Australian law enforcement to identify the suspect.

Initial analysis of AUSTRAC information identified that the suspect held multiple Australian bank accounts in a false name, a joint bank account with a third-party and a business account for a cafe he operated. The SMRs detailed a range of transactions, described below, which reporting entities considered to be suspicious.

International funds transfer instructions (IFTIs)

The SMRs detailed high-value incoming IFTIs sent to the suspect's Australian bank accounts. The suspect received incoming IFTIs in USD totalling approximately AUD1.5 million. These funds were sent from Hong Kong by different individuals and businesses over a one-month period. The suspect also received two incoming IFTIs for AUD90,000 and AUD95,000 from Canada.

Further analysis identified incoming IFTIs into the suspect's accounts totalling approximately AUD6.6 million over a one-year period. The IFTIs were sent from Canada, Hong Kong, Indonesia, Nigeria and the United Arab Emirates. The individual IFTIs were for amounts between AUD30,000 and AUD765,000.

Of the AUD6.6 million transferred into the suspect's accounts, AUD2.6 million was sent to the suspect's personal account, mostly from Hong Kong, Canada and Nigeria. The suspect's business account received approximately AUD4 million from Hong Kong, Indonesia, Nigeria and the United Arab Emirates. The high-value IFTI activity was inconsistent with the café's established customer profile.

The SMRs reported that the suspect withdrew the funds received via the incoming IFTIs shortly after receiving them, using a range of withdrawal types:

  • cash withdrawals at different bank branches in two Australian states
  • cash withdrawals from automatic teller machines (ATMs) at gaming venues
  • use of a debit card to purchase high-value goods including:
    • AUD50,000 purchase at a luxury car dealer
    • AUD95,000 purchase at a high-end jeweller
    • withdrawal of a bank cheque for AUD195,000 made payable to a real estate agent.

Over the same period the suspect sent IFTIs totalled approximately AUD318,000. The IFTIs were sent to the United States, Canada, Germany, Luxembourg and Malaysia. The value per transaction ranged between AUD20 and AUD245,000. An outgoing IFTI to Canada for AUD245,000 was described by the suspect as 'pay out of mortgage'.

An SMR noted that the high-value incoming IFTIs and withdrawals were inconsistent with the customer's established profile, and therefore grounds for suspicion.

Cash withdrawals

The SMRs identified a large number of high-value cash withdrawals from accounts operated by the suspect:

  • eight cash withdrawals totalling AUD94,000 conducted at multiple bank branches over a 10-month period in amounts ranging between AUD1,000 to AUD57,000
  • cash withdrawals undertaken within a short time frame at multiple bank branches including:
    • three cash withdrawals totalling AUD25,000 over an eight-day period in amounts ranging between AUD6,500 and AUD9,500
    • more than 15 cash withdrawals undertaken at multiple bank branches totalling AUD128,000 over a two-month period in amounts ranging between AUD5,000 and AUD9,700
  • The above withdrawals appeared to be structured into amounts of less than AUD10,000 to avoid the threshold transaction reporting regime (5)
  • eight cash withdrawals of AUD1,000 each on the same day at the same branch
  • more than 100 cash withdrawals at ATMs totalling AUD105,000 over a three-month period in amounts of between AUD80 and AUD2,000

Cash deposits

The SMRs detailed a high volume of high-value cash deposits at multiple bank branches, including:

  • two cashdeposits of AUD8,500 and AUD32,000 made at two bank branches on different days
  • cash deposits totalling AUD56,000 over a three-month period with each deposit ranging between AUD3,000 and AUD23,000
  • cash deposits for amounts between AUD45 and AUD65,000 totalling AUD105,000 made at multiple bank branches over a 10-month period.

Domestic electronic transfers

The SMRs also detailed high-volume and high-frequency domestic electronic transfers between the suspect's accounts:

  • numerous transfers totalling AUD1.3 million over a two-month period between the suspect's accounts
  • transfers from the joint bank account to the suspect's own accounts totalling AUD1.5 million over a three-month period
  • transfers to and from unrelated third parties including:
    • approximately 75 transfers totalling AUD7.2 million ranging in value between AUD140 and AUD1.2 million over a three-month period from the suspect's accounts to unrelated third parties
    • transfers received from unrelated third parties totalling AUD7.2 million over a three-month period, ranging in value between AUD400 and AUD1.2 million.

Dissemination of SMRs to partner agencies

After analysing the SMRs, AUSTRAC disseminated them to law enforcement partner agencies, who used them to identify additional false names used by the suspect.

A further five SMRs submitted by reporting entities triggered AUSTRAC's monitoring system and were also disseminated to law enforcement. The financial transaction activity reported to AUSTRAC in the SMRs was consistent with the activity outlined above. Reporting entities detailed additional financial activity of the suspect including:

  • two domestic electronic funds transfers conducted on consecutive days for AUD25,000 and AUD60,000 to bank accounts held by a casino and another gaming venue
  • cash buy-ins of gaming chips totalling AUD275,000 during six visits to a casino, amounting to a total annual loss of AUD53,700 (6)
  • multiple structured cash buy-ins of gaming chips worth AUD9,000 and the suspect's refusal to show identification at a casino
  • cash totalling AUD175,000 used to place bets at multiple gaming venues over a two-month period.

AUSTRAC information combined with analysis undertaken by law enforcement confirmed the identity of the suspect. AUSTRAC data identified phone numbers and address details used by the suspect which ultimately led to his arrest. AUSTRAC data also provided authorities with detailed information about the suspect's financial activities.

The suspect was arrested and extradited to the United States. He pleaded guilty to conspiracy to commit bank fraud, conspiracy to commit money laundering and computer fraud. He was sentenced to five years and 10 months imprisonment. The suspect also agreed to assist United States authorities to recover the stolen funds.

Offence

  • Money laundering
  • Fraud

Customer

  • Business
  • Individual

Industry

  • Banking (ADIs)
  • Gambling services

Channel

  • Electronic
  • Physical

Report type

  • IFTI
  • SMR

Jurisdiction

  • Domestic
  • International – Canada, Germany, Hong Kong, Indonesia, Luxembourg, Nigeria, the United Arab Emirates

Designated service

  • Account and deposit-taking services
  • Gambling services

Indicators

  • Account activity inconsistent with customer/business profile
  • High-value cash deposits at multiple bank branches over a short period of time
  • High-value or structured casino chip cash buy-ins
  • High-value transfers to accounts held in the name of a casino and gaming venue
  • High-volume and high-value incoming international funds transfers to Australia for no apparent logical reason
  • High-volume and/or high-value cash withdrawals at multiple bank branches and ATMs
  • Incoming international funds transfers from a high-risk jurisdiction
  • Large amount of cash used to place bets at a casino over a short period of time
  • Multiple cash withdrawals below the AUD10,000 reporting threshold (that is, structured cash deposits)
  • Multiple same-day cash withdrawals conducted at ATMs and the same bank branch
  • Outgoing international funds transfers to pay out a mortgage
  • Refusal to show identification when undertaking cash buy-ins of gaming chips
  • Significant cash withdrawals over a short period of time
  • Third-party transfers to and from accounts for no apparent logical reason
  • Use of debit cards to purchase high-value goods

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Case 6 – Accountant jailed for laundering money via Hong Kong and New Zealand

An Australian law enforcement agency conducted an investigation into a suspect believed to be involved in laundering money. AUSTRAC information linked the suspect to multiple companies and structured cash deposits. The suspect was charged with providing incomplete information in relation to a financial transaction.

The suspect pleaded guilty and was sentenced to nine months imprisonment and received a two-year good behaviour bond.

Over a two-year period an account held by the main suspect received more than 80 'structured' cash deposits, as a well as a small number of cheque deposits (7). The cash and cheques were deposited into an account held by the suspect. The suspect, an accountant, regularly consolidated the funds from the various deposits and transferred the funds electronically to third-party domestic accounts. Authorities believed the suspect received a percentage of the funds he transferred as a commission for his services.

Although the exact source of the funds laundered by the suspect is unknown, authorities identified possible links between the funds and the importation of drugs into Australia. AUSTRAC information linked the suspect to approximately 50 companies and revealed that the structured cash deposits into the suspect's account were made on behalf of both companies and individuals.

AUSTRAC also received four suspicious matter reports (SMRs) from reporting entities detailing structured cash deposits undertaken by the suspect.

Further analysis by AUSTRAC identified that the suspect also undertook international funds transfer instructions (IFTIs) worth more than AUD700,000 to Hong Kong and New Zealand. The funds were transferred from accounts held in the suspect's name to overseas business accounts in amounts ranging from AUD400 to AUD50,000. In some instances the offshore recipient businesses shared the same name as businesses operated by the suspect in Australia.

The suspect was charged under section 31 of the Financial Transaction Reports Act 1988 and section 142(1) of the Anti-Money Laundering and Counter-Terrorism Act 2006 for providing incomplete information in relation to a financial transaction. He pleaded guilty and was sentenced to nine months imprisonment and received a good behaviour bond for a period of two years.

Offence

Money laundering

Customer

  • Individual
  • Business

Industry

Banking (ADIs)

Channel

  • Electronic
  • Physical

Report type

  • IFTI
  • SMR

Jurisdiction

  • Domestic
  • International – New Zealand, Hong Kong

Designated service

  • Account and deposit-taking services
  • Remittance service (money transfer)

Indicators

  • Multiple domestic transfers to third-party accounts
  • Multiple international funds transfers which are inconsistent with the established customer profile
  • Structured cash deposits into a bank account from third parties
  • Structured financial transactions in personal and business names

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Case 7 – Cash courier transferred millions of dollars to Hong Kong for money laundering syndicate

A law enforcement agency identified a suspect believed to be working as a cash courier for a suspected money laundering syndicate. AUSTRAC data revealed that the suspect and additional cash couriers were laundering millions of dollars internationally for the syndicate.

Three suspects were arrested and received sentences ranging from 11 months imprisonment, a 12-month intensive corrections order and a 12-month good behaviour bond. Authorities also seized AUD543,000 cash.

Analysis of AUSTRAC data revealed that suspect A and additional cash couriers were depositing and transferring millions of dollars internationally for the syndicate.

The syndicate used the following method to move funds:

  • Suspect B instructs suspect A to open two business accounts. Suspect A is made the sole signatory for the accounts.
  • When suspect B takes possession of illicit cash, she contacts suspect A, who then flies interstate to meet her.
  • Suspect A meets suspect B at a designated location where suspect B provides suspect A with the cash to be deposited and instructions on where the funds are to be transferred overseas.
  • Suspect A deposits the cash into one of the business accounts. She makes several deposits across a number of different bank branches on the same day.
  • On suspect B's instructions, suspect A transfers the funds overseas to accounts in Hong Kong.
  • Afterwards, suspect A gives the receipts for the deposits and transfers to suspect B.

AUSTRAC information identified a significant spike in suspect A's financial activity over a six-month period:

  • During the first month of activity, the business accounts held by suspect A received more than AUD430,000 in cash deposits, by third parties in various states.
  • In the first two months of activity, suspect A sent international funds transfer instructions (IFTIs) totalling more than AUD2.3 million to businesses located in Hong Kong.
  • Although suspect A's business accounts appeared to be receiving significant amounts of money from various sources and then transferring the funds overseas on their behalf, the business was not registered with AUSTRAC as a remittance dealer.

Prior to the transaction activity described above, AUSTRAC had recorded minimal financial transaction activity undertaken by suspect A.

The subsequent three months saw the business account set up by suspect A receive cash deposits worth more than AUD4.8 million.

Suspicious matter reports (SMRs) submitted to AUSTRAC highlighted the extent of financial activity related to suspect A and his business account. Some of these details included:

  • Each month suspect A's business account received hundreds of cash deposits and electronic domestic transfers. Some cash deposits were undertaken by third parties. These deposits and transfers totalled more than AUD1 million per month.
  • Typically, around AUD200,000 of the total deposits each month was deposited in structured cash amounts of less than AUD10,000 (8). The remainder of the cash deposits were for larger amounts ranging from AUD10,000 to AUD70,000.
  • A small portion of the funds was then debited from the accounts through cash withdrawals or domestic transfers.
  • The majority of the funds were transferred via IFTIs to businesses located in Hong Kong, some of which were thought to be foreign exchange companies. These IFTIs ranged in value from AUD10,000 to AUD98,000
  • The cash withdrawals, domestic transfers and IFTIs were usually conducted soon after a deposit was made into the account. This activity appeared to be inconsistent with the customer's established profile.

Three suspects were arrested by law enforcement and AUD543,000 cash was seized. Suspect A and B pleaded guilty to dealing in property reasonably suspected to be the proceeds of crime greater than AUD100,000.

Suspect A was sentenced to 11 months imprisonment, suspect B was given a 12-month intensive corrections order, and an additional suspect was given a 12-month good behaviour bond.

Offence

Money laundering

Customer

  • Business
  • Individual

Industry

Banking (ADIs)

Channel

  • Electronic
  • Physical

Report type

  • IFTI
  • SCTR
  • SMR

Jurisdiction

  • Domestic
  • International – Hong Kong

Designated service

Account and deposit-taking services

Indicators

  • Frequent cash deposits occurring at different branches on the same day
  • International funds transfers to overseas businesses similar in total value to recently received cash deposits
  • Structuring of cash deposits below AUD10,000 to avoid reporting obligations
  • Sudden increase in financial activity inconsistent with individual's transaction history
  • Third parties making regular cash deposits into a business account
  • Withdrawals conducted quickly after deposits

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Case 8 – AUSTRAC information revealed extent of people smuggling operation

AUSTRAC information assisted authorities with an investigation which disrupted an international people smuggling operation, resulting in the arrest of two Australia-based facilitators.

The two suspects received sentences of five years imprisonment and eleven-and-a-half years imprisonment respectively.

Law enforcement officers established that the people smuggling syndicate used boats to illegally transport foreign nationals from Indonesia to Australia. Authorities suspected that the syndicate members were in contact with Australia-based associates to organise the people smuggling operation.

Authorities alleged that suspects A and B were key players in the people smuggling syndicate, responsible for planning and facilitating the unlawful arrivals into Australia. The majority of prospective customers were Iraqi and Iranian nationals and the syndicate allegedly charged between AUD4,500 and AUD10,000 per person.

AUSTRAC analysis of financial transaction reports showed that over a five-year period suspect B sent 28 international funds transfer instructions (IFTIs) out of Australia totalling more than AUD42,000. The IFTIs were primarily sent to Indonesia.

The IFTIs undertaken by suspect B were conducted via remittance service providers for low-value transfers of between AUD100 and 5,000. A small number of the IFTIs were sent with payment details describing them as 'gift' or 'personal'.

AUSTRAC information also included threshold transaction reports (TTRs) which showed that:

  • over a two-month period, bank accounts held in the name of suspect B received two cash deposits totalling more than AUD37,000
  • over a one-year period, suspect B made four large cash withdrawals totalling more than AUD57,000. The cash withdrawals were conducted at various bank branches and were conducted on separate days.

AUSTRAC information indicated that suspect B also sent and received IFTIs while in Indonesia. AUSTRAC's financial intelligence database recorded suspect B as:

  • an Indonesia-based 'ordering' customer, sending three IFTIs to Australia from Indonesia over a 10-day period, totalling more than AUD7,000. The 'details of payment' section of the IFTI report for these transactions was left blank by suspect B. 
  • an Indonesia-based beneficiary, indicating he received six IFTIs totalling more than AUD20,000 sent from Australia to Indonesia over a two-month period.

Law enforcement officers executed 10 search warrants across Victoria and New South Wales, with authorities seizing documents and computers, resulting in the arrests of suspects A and B.

Suspect A was charged with facilitating the proposed entry into Australia of a group of at least five non-citizens and providing material support to a person to engage in people smuggling activities contrary to the Migration Act 1958.

Suspect A was also charged with importing and possessing a marketable quantity of a border-controlled drug, namely methamphetamine, contrary to the Criminal Code Act 1995 (Cwlth). It was alleged the drugs were sent via post to Australia from the Middle East and had an estimated street value of AUD750,000. He was sentenced to prison for eleven-and-a-half years for all offences.

Suspect B was charged with people smuggling contrary to the Migration Act 1958. He was found guilty of aggravated people smuggling and was sentenced to five years imprisonment.

Offence

  • Drug importation
  • People smuggling

Customer

Individual

Industry

  • Banking (ADIs)
  • Remittance services

Channel

Electronic

Report type

  • IFTI
  • TTR

Jurisdiction

Domestic and international – Indonesia

Designated service

  • Account and deposit-taking services
  • Remittance services (money transfers)

Indicators

  • Cash withdrawals conducted over multiple days
  • Customer undertaking transactions that appear inconsistent with their profile and/or transaction history
  • Multiple electronic transfers from third parties
  • Multiple international funds transfers to a country of interest to authorities
  • Multiple low-value international value transfers
  • Unusually large volume of cash deposits and withdrawals

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Case 9 – Suspicious funds transfers to Mexico unearthed million dollar drug trafficking syndicate

A suspicious matter report contributed significantly to a law enforcement operation which ultimately dismantled an international drug importation syndicate operating in Australia.

Authorities used AUSTRAC information to identify individuals of interest, establish links between syndicate members, support existing intelligence and identify financial transactions of interest to authorities.

Two suspects were convicted of attempting to possess commercial quantities of unlawfully imported border controlled drugs. One was sentenced to eight years and six months imprisonment, the other was sentenced to 17 years imprisonment.

The syndicate imported into Australia 14 kilograms of cocaine and 133 kilograms of methamphetamine with a combined estimated value of AUD14 million. The drugs were concealed in beer bottles in a consignment sent from Mexico.

The initial SMR disseminated by AUSTRAC to authorities detailed the financial activities of an individual who was later found to a member of the syndicate. The individual was found to be associated with two suspects (A and B) who were also members of the syndicate. The SMR included the following information:

  • Over a four-day period the individual sent two international funds transfer instructions (IFTIs) of AUD9,000 each to Mexico.
  • The funds transfers were paid for with cash.
  • The transfers were seemingly 'structured' into amounts of less than AUD10,000 to avoid the threshold transaction reporting requirements (9).

The SMR, combined with intelligence received from other authorities, prompted AUSTRAC to produce a financial intelligence report for its law enforcement partners detailing the financial activities of the syndicate.

AUSTRAC information was a significant source of intelligence used by authorities to identify links between key syndicate members. The information helped authorities link suspects who had not previously been associated with each other, including suspects A and B.

Large cash deposits expose suspects A and B

Analysis of AUSTRAC information identified a number of threshold transaction reports (TTRs) which detailed large cash deposits made by suspect A. AUSTRAC information showed that:

  • one year prior to the importation, suspect A made two cash deposits, worth AUD10,000 and AUD150,000, into his accounts on two different days
  • in the four months preceding the importation, suspect A deposited approximately AUD160,000 cash into his accounts, staggered over four days. The value per transaction ranged between AUD10,000 and AUD70,000
  • in the month preceding the importation, suspect A deposited AUD25,000 cash into his account
  • a cash deposit funded an international funds transfer of AUD50,000 to an account in Turkey in the name of suspect A.

These deposits were believed to be illicit funds associated with the importation of drugs.

Analysis of AUSTRAC information also showed that two years prior to the importation suspect B deposited AUD130,000 cash into his personal bank accounts. The value per transaction ranged between AUD15,000 and AUD60,900. These transactions were reported to AUSTRAC via TTRs and significant cash transaction reports (SCTRs).

Searches of the AUSTRAC database revealed that members of the syndicate sent high-value IFTIs to various overseas beneficiaries:

  • They transferred a total of AUD245,000 to multiple beneficiaries in Mexico over a three-year period. The value per transaction ranged from AUD200 to AUD9,000. The IFTIs were sent via remittance services and a financial institution.
  • Syndicate members sent IFTIs totalling AUD1 million to an account in Turkey held in the name of suspect A. The value per transaction ranged from approximately AUD47,000 to AUD237,000. The funds were sent via banks over a 10-month period in the year preceding the importation.  

Australian authorities received information from international counterparts in Turkey which revealed that the majority of the funds transferred to Turkey were transferred onwards to Mexico. Authorities believe these funds were transferred to Mexico to fund the drug importation. Suspect A withdrew approximately USD107,000 cash from his account while visiting Turkey.

Authorities executed search warrants on several properties and seized six kilograms of methamphetamine, weapons and ammunition. Also seized from suspect A's residential property were approximately 39 cases of empty beer bottles. Suspects A and B were arrested during the operation.

Suspects A and B were both convicted of attempting to possess commercial quantities of unlawfully imported border controlled drugs, namely cocaine and methamphetamine, contrary to the Criminal Code Act 1995.

Suspect A was sentenced to eight years and six months imprisonment, while suspect B was sentenced to 17 years imprisonment.

Offence

Drug importation

Customer

Individual

Industry

  • Banking (ADIs)
  • Remittance services

Channel

  • Electronic
  • Physical

Report type

  • IFTI
  • SCTR
  • SMR
  • TTR

Jurisdiction

International – Mexico, Turkey

Designated service

  • Account and deposit-taking services
  • Gambling services
  • Remittance services (money transfers)

Indicators

  • Cash used to pay for international funds transfers
  • High-value cash deposits
  • High-volume account activity involving significant amounts of cash funds
  • International funds transfers where an individual is both the ordering and beneficiary customer
  • Large cash withdrawals in a high-risk jurisdiction
  • Multiple customers conducting international funds transfers to the same overseas beneficiary
  • Multiple international funds transfers to high-risk jurisdictions (10)
  • Regular or multiple cash deposits just below the AUD10,000 cash transaction reporting threshold

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Case 10 – Accountant's overseas tax evasion scheme landed clients in jail

AUSTRAC information assisted authorities to investigate a tax evasion scheme promoted and facilitated by an accountant in Australia (11). The scheme used false invoices and loans to avoid tax. Authorities identified that a client of the accountant defrauded the Commonwealth of AUD2 million over a five-and-a-half year period.

The accountant was sentenced to six years imprisonment. The accountant's clients were sentenced to prison terms ranging from two to four years.

Authorities commenced an investigation into the accountant and a number of his clients, including suspect A.

Investigating authorities identified that suspect A operated an import business in Australia and was a participant in the tax evasion scheme operated by the accountant.

Suspect A and his wife were directors and shareholders of an Australian company (company 1). Suspect A was also a director and shareholder of another Australian company (company 2). An associate of suspect A was the co-director of company 2.

Authorities identified that the accountant controlled company 3, which was registered in Hong Kong and operated a bank account in Australia. This company was used to issue false invoices to companies 1 and 2.

False invoices

Over a five-and-a-half year period company 3 issued false invoices to companies 1 and 2 for supposed 'brokering services'. Suspect A paid the false invoices, which totalled more than AUD2 million, by directing companies 1 and 2 to pay company 3. Over the five-and-a-half year period, at suspect A's direction:

  • company 1 paid company 3 a total of AUD1 million
  • company 2 paid company 3 a total of AUD1 million.

The payment of the false invoices was made by either domestically transferring funds to company 3, or by company 2 issuing cheques made payable to company 3. For example, company 1 domestically transferred AUD50,000 to company 3 in one transaction, and company 2 issued cheques totalling AUD1 million made payable to company 3 over a six-month period.

The payments were supposedly for 'commissions' on commercial deals brokered by company 3. Enquiries revealed that company 3 was not a broker and no service had been provided to warrant the payments.

Companies 1 and 2 falsely claimed deductions in their tax returns for the 'commissions' paid to company 3, which reduced their taxable income.

False loan

The funds paid to company 3, less the accountant's 10 per cent fee, were returned to suspect A and individuals associated with him.

Over the five-and-a-half year period, company 3 and other companies controlled by the accountant returned approximately AUD1.8 million of the funds originally paid by companies 1 and 2. The funds were distributed at suspect A's direction as follows:

  • AUD100,000 by way of a loan to suspect A's business associate and co-director of company 2
  • AUD200,000 to suspect A's wife
  • AUD1.5 million to suspect A disguised as a 'loan'.

Analysis of AUSTRAC information identified two outgoing international funds transfer instructions (IFTIs) totalling AUD270,000 each, sent from company 3 to suspect A's bank account in Japan. The transfers represent part of funds returned to suspect A disguised as a 'loan'.

Suspect A claimed that the AUD1.5 million received from company 3 and other companies controlled by the accountant were a 'loan' from another company (company 4), which was registered in the British Virgin Islands and owned and controlled by the accountant. However, authorities found no evidence to support this claim: there was no record of any payments from company 4 to the suspect's personal bank accounts, company 4 did not have any bank accounts in Australia and it had not deposited any funds into any Australian banks.

Analysis of AUSTRAC data showed that suspect A and company 2 were both the ordering and beneficiary customers of international funds transfers from Australia to Japan totalling AUD1 million, sent over a period of three years.

Authorities believed these transfers were the proceeds of the tax evasion which were sent to Japan for the benefit of suspect A. In essence, suspect A directed companies 1 and 2 to make payments to company 3 in order for the funds to be transferred back to him tax free.

Authorities identified that suspect A spent approximately AUD400,000 of the funds received from companies controlled by the accountant on the demolition and rebuilding of his home, mortgage payments and living expenses.

Income tax inconsistencies

Authorities analysed the personal income tax returns of suspect A and identified that in one financial year he reported his gross income as AUD30,000. During the same financial year, AUD400,000 was deposited into a personal bank account held by suspect A, and AUD450,000 was withdrawn from the account.

Over the next three years, suspect A reported his gross personal income as AUD30,000 per year. Suspect A did not declare the AUD1.5 million he received from company A.

Authorities executed more than 20 search warrants on properties including the accountant's Australian accountancy business and suspect A's residential property, from which large quantities of documents were seized.

Charges and sentencing

Suspect A was charged with:

  • three counts of being knowingly concerned in defrauding the Commonwealth under the Crimes Act 1914
  • one count of aiding in general dishonesty causing a loss under the Criminal Code Act 1995
  • one count of aiding in obtaining a financial advantage by deception under the Criminal Code Act
  • four counts of obtaining a financial advantage by deception under the Criminal Code Act.

Suspect A was convicted and sentenced to four years imprisonment and required to pay a penalty of AUD1 million.

The accountant was convicted of aiding and abetting the commission of fraud against the Commonwealth and was sentenced to six years imprisonment.

A further three clients of the accountant were convicted of obtaining a financial advantage by deception. Two of the clients were sentenced to three years imprisonment and the third client was sentenced to two years imprisonment.

Offence

Tax evasion

Customer

  • Business
  • Foreign entity
  • Individual

Industry

Banking (ADIs)

Channel

Electronic

Report type

IFTI

Jurisdiction

International – British Virgin Islands, Hong Kong, Japan

Designated service

Account and deposit-taking services

Indicators

  • Customer is both the ordering and beneficiary customer for multiple outgoing international funds transfers
  • Customer receives international funds transfers described as 'loan'
  • Customer undertaking complicated transfers without a business rationale
  • High-value international funds transfers from Australia with no apparent logical reason
  • Use of an accountant to facilitate unusually complicated transactions
  • Use of tax secrecy jurisdictions

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Case 11 – Complex tax avoidance scheme hid funds in Samoa and New Zealand

AUSTRAC information assisted authorities to identify offshore bank accounts and international funds transfers in relation to a complex tax avoidance scheme involving funds transfers between Australia, Samoa and New Zealand (12). The scheme involved the use of an offshore superannuation fund and a loan arrangement to avoid tax.

Authorities ultimately issued amended tax assessments to the individuals involved, resulting in approximately AUD2 million in additional tax, penalties and interest.

This complex case is presented in four parts:

  • Part 1 covers international transfers made to an offshore superannuation fund and the rapid return of these funds to Australia.
  • Part 2 covers the ongoing international transfers of funds under a fictitious loan arrangement over ten years.
  • Part 3 describes the transfer of this loan arrangement to another Australian company when the original company went into liquidation. This covers a further four years worth of activities.
  • Part 4 shows how a charity became involved in the loan arrangement.  

Individuals A and B were family members who owned and controlled a group of Australia-based companies (13). The companies undertook motor vehicle repairs and sold automotive products in Australia.

Arrangement 1: Offshore superannuation fund

Individuals A and B received advice from an accountant about the purported benefits of offshore superannuation funds. As a result, individual A instructed his accountant to establish a superannuation fund in Samoa. The superannuation fund was established and a Samoa-based company acted as trustee of the fund.

Company 1 was owned and controlled by individuals A and B, and formed part of the Australia-based group. Company 1 made two contributions of AUD100,000 each to the superannuation fund in Samoa. The two international funds transfers were undertaken over an eight-day period and the funds were subsequently provided to a private bank in Samoa.

The Samoa-based private bank returned the AUD200,000 to company 1 in Australia in two international funds transfers of AUD100,000. The transfers were made within one month of the initial contributions being made to the superannuation fund. The two transfers of AUD100,000 were described as a 'loan' from the bank to company 1. There was no loan agreement in place to support the transfer of these funds.

Company 1 subsequently claimed deductions for the AUD200,000 offshore superannuation contribution in its tax return and was assessed as liable for less tax than it should have been, thereby avoiding its tax obligations.

The deductions were later disallowed and deemed not deductible under the Income Tax Assessment Act 1936. An amended tax assessment was issued to company 1 by the Australian Taxation Office (ATO).

Arrangement 2: Loan arrangement (years 1 to 10 of the scheme)

Individuals A and B entered into a loan agreement on behalf of company 1 with the Samoa-based private bank. This arrangement was separate to the AUD200,000 'loan arrangement' described above in 'Arrangement 1'. This second loan arrangement remained in place for more than 10 years and was later transferred to other companies in the group.

A subsidiary company of the Samoa-based private bank held a bank account in New Zealand. The subsidiary was instrumental in facilitating payments between the Samoa-based private bank and company 1, or companies and individuals associated with the Australia-based group.

In subsequent years, in accordance with the loan agreement, companies controlled by individuals A and B made annual 'interest' payments on the loan to the bank or its subsidiary, by way of international funds transfer.

The interest payments were then borrowed back from the Samoa-based private bank or its subsidiary, with funds transferred back to Australia to either company 1 or other companies and individuals associated with the group. The returned funds were generally described as 'draw downs' or 'loans'.

This complex 'round robin' tax avoidance arrangement aimed to disguise the funds movements as legitimate transactions associated with the loan. In reality, any funds sent overseas ultimately returned to the original beneficiary, either company 1 or other companies in the Australia-based group (14).

Transfer of the loan arrangement from company 1 to company 2 (years 11 to 14 of the scheme)

Company 1 changed its name and subsequently went into liquidation. As a result, the ATO was forced to write off a tax debt of AUD800,000 which had accrued on the income tax account of the company.

After company 1 went into liquidation the loan liability was transferred to company 2. Company 2 was incorporated in Australia and was associated with company 1 and individuals A and B. The loan liability at this time was approximately AUD3 million.

Company 2 continued to utilise the tax avoidance arrangement by making interest payments on the loan to the Samoa-based private bank via its subsidiary. Each time company 2 made interest payments to the bank, the bank's subsidiary subsequently transferred funds into company 2's bank accounts in Australia. These transfers were described as 'loan draw downs'.

Information in IFTIs, combined with information received by authorities, revealed four years worth of incoming and outgoing international fund transfers between company 2 in Australia and the bank's subsidiary company, which held a bank account in New Zealand.

Company 2 claimed that the funds received as 'loan draw downs' were lent to companies in the Australian group of companies by way of interest-free loans.

Introduction of an Australian charitable organisation (years 15 to 16 of the scheme)

To further complicate the loan arrangement, another Australian organisation was introduced to the transaction activity. This organisation was unrelated to the main group of companies and was described as a charitable organisation. The organisation facilitated the transfer of funds between the bank's New Zealand subsidiary and the Australian group of companies.

AUSTRAC information, combined with other information received by authorities, showed:

  • company 2 sent funds representing 'interest payments' to the New Zealand bank account of the bank's subsidiary
  • the subsidiary transferred funds, in similar amounts to the 'interest payments', from its New Zealand bank account to the bank account of the Australian charitable organisation. The transfers were described as 'draw downs' and 'transfer of funds'
  • four to five days later, the charitable organisation conducted a domestic transfer for a similar amount into the bank account of company 2, described as a 'loan draw down'.

In its tax returns, company 2 claimed deductions for interest expenses and fees paid to the Samoa-based private bank. As a result of claiming these deductions, company 2 reduced its taxable income and was assessed as liable for less tax than it should have been, thereby avoiding its tax obligations.

It was later determined that these expenses were not deductible and the deductions were disallowed. Amended assessments for company 2 were issued resulting in approximately AUD2 million in additional tax, penalties and interest.

Offence

Tax avoidance

Customer

  • Business
  • Foreign entity
  • Individual

Industry

Banking (ADIs)

Channel

Electronic

Report type

IFTI

Jurisdiction

International – Samoa, New Zealand

Designated service

Account and deposit-taking services

Indicators

  • Customer receives international funds transfers described as 'loan draw down' or 'loan advance'
  • Customer undertaking complicated transfers without a business rationale
  • International funds transfers to and from a high-risk jurisdiction
  • Multiple high-value international funds transfers to and from Australia with no apparent logical reason
  • Outgoing funds transfers sent to offshore entities followed soon after by incoming funds transfers of similar amounts from the same offshore entities
  • Use of charitable organisation with a lack of business rationale
  • Use of third-party company accounts in an attempt to complicate transaction activity
  • Use of third-party or family member accounts

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Case 12 – Street drugs smuggled into Australia inside stuffed toys and nappies

Suspicious matter reports assisted law enforcement with an investigation into a sophisticated drug importation criminal syndicate. AUSTRAC information also assisted authorities to identify the scale of the syndicate's financial activity.

A member of the syndicate was charged with attempting to import a marketable quantity of border-controlled drugs and precursors. He was sentenced to a maximum of six years and eight months imprisonment.

Law enforcement authorities disrupted a complex and sophisticated Adelaide-based criminal syndicate, which used stuffed toys, cushions and nappies to import large quantities of pseudoephedrine and methamphetamine into Australia. Authorities estimated that the drugs had a street value of AUD6.6 million.

The investigation was initiated after law enforcement officers examined cargo imported into Australia from Hong Kong and found approximately 126 grams of crystal methamphetamine hidden within a stuffed toy and concealed among other clothing.

Over a 13-day period authorities identified further drugs imported into Australia including approximately 535 grams of crystal methamphetamine concealed in stuffed toys and the lining of nappies and approximately 7 kilograms of pseudoephedrine concealed in cushions. The investigation led to the arrest of suspect A, who allegedly directed the importation of drugs.

Law enforcement authorities allege that in addition to importing multiple packages to various locations in Adelaide, the criminal syndicate also made multiple international funds transfers to China to fund the importation of drugs. AUSTRAC data showed that over a one-year period, syndicate members sent international funds transfer instructions (IFTIs) totalling more than AUD137,000 to China.

The AUSTRAC database revealed two suspicious matter reports (SMRs) involving a syndicate member.

  • A reporting entity submitted an SMR following observations that, in one month, syndicate member #1 sent 15 IFTIs totalling more than AUD67,000 to China. The reporting entity formed its suspicions on the basis that:
    • all of the outgoing IFTIs were paid for with cash, in structured amounts below the AUD10,000 cash reporting transaction threshold
    • the IFTIs were sent to multiple beneficiary customers in a high-risk jurisdiction (15)
    • the volume and frequency of the funds transfers undertaken by the syndicate member was higher than normal for an average customer.
  • Another reporting entity submitted an SMR detailing how another customer, syndicate member #2, attended a branch to deposit cash and conduct two IFTIs totalling AUD33,000 to China. The SMR noted that the funds were sent to the same China-based beneficiary that an apparently unrelated customer had sent IFTIs to the previous day. Further investigation revealed that this 'unrelated customer' was syndicate member #1 referred to above.

    The bank identified that syndicate member #1 had attended the branch the day before and deposited AUD9,000 cash, in amounts of AUD1,000 and AUD8,000. The syndicate member then withdrew AUD8,000 and undertook an IFTI for AUD8,000 to the common beneficiary customer in China.

    The reporting entity contacted syndicate member #1 about these transactions. He was guarded and evasive when asked about the reason for the transfer of funds to China, and his relationship to syndicate member #2 (who had sent AUD33,000 to the same individual in China the next day).

    The bank determined that it was unusual that a total of AUD41,000 had been transferred to the same beneficiary in China over two consecutive days by two different customers. This, combined with syndicate member #1's reluctance to explain or provide further details about the transaction and the bank's inability to determine the purpose of the funds transfers, prompted the bank to submit an SMR to AUSTRAC.

The AUSTRAC database also showed that suspect A had sent 11 IFTIs to China totalling more than AUD37,000.

AUSTRAC information also assisted authorities to identify the scale of the activity. Since January 2008, syndicate members were linked to approximately 400 outgoing IFTIs to China totalling approximately AUD3 million and 40 outgoing IFTIs to Hong Kong totalling approximately AUD400,000.

Law enforcement authorities executed search warrants at two residential premises. Various items were seized including more than AUD14,000 cash, SIM cards, computers, documents, fake Chinese and Australian identification, stuffed toys with their contents removed, drugs paraphernalia including scales and 'deal' bags, and containers containing residual trace elements of methamphetamines.

Suspect A was charged with importing and attempting to import a marketable quantity of border-controlled drugs and precursors. He was sentenced to a maximum of six years and eight months imprisonment.

Offence

Drug importation

Customer

Individual

Industry

  • Banking (ADIs)
  • Remittance services

Channel

  • Electronic
  • Physical

Report type

  • IFTI
  • SMR

Jurisdiction

International – China, Hong Kong

Designated service

  • Account and deposit-taking services
  • Remittance services

Indicators

  • Customer is reluctant to provide further details about a transaction
  • Multiple customers conducting international funds transfers to the same overseas beneficiary in a short time frame
  • Multiple international funds transfers paid for in cash in amounts just below the AUD10,000 reporting threshold
  • Multiple international funds transfers to a high-risk jurisdiction

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Case 13 – Crime syndicate recruited Malaysian nationals for major credit card fraud

AUSTRAC information was used to verify the identities of an organised crime syndicate undertaking credit card fraud.  A number of suspicious matter reports also assisted authorities to unravel the group's illicit financial activities.

Two members of the syndicate were charged with fraud-related offences. One was sentenced to two years and three months imprisonment and the other to 12 months imprisonment.

A Melbourne-based Asian organised crime syndicate operated a company arranging for overseas students to migrate to Australia. This company was also used to facilitate a credit card shopping fraud scheme.The syndicate recruited Malaysian nationals with significant gambling debts to assist in fraudulently purchasing high-value portable goods which could be resold easily.

The syndicate used false identity documents to create fake identities for the recruits. These documents were either fraudulently produced or were genuine documents obtained in false names. The false identities were used to obtain legitimate identity documents – for example, drivers licences – which were then used to set up bank accounts and apply for bank loans.

The syndicate provided the recruits with fraudulently obtained items such as credit cards. The recruits were then taken to several shopping centres around Australia to purchase portable high-value goods such as laptops, navigation devices, personal music devices, jewellery, department store gift cards and premium alcohol. The recruits provided the goods to the syndicate who on-sold the items to unwitting third parties for cash. The recruits were given a portion of the proceeds to pay off personal gambling debts.

AUSTRAC information was used by authorities to verify identities used by the syndicate and to identify related international funds transfer instructions (IFTIs). A number of suspicious matter reports (SMRs) also assisted authorities to unravel the group's illicit financial activities. AUSTRAC analysis and law enforcement investigations suggested that syndicate members used a portion of their criminal proceeds to purchase property, while other funds were laundered through Australian casinos.

One SMR submitted by a casino revealed that a member of the syndicate had converted AUD32,000 of gaming chips for cash, providing a casino identity card that was not linked to any 'rated play' (gambling activity), at the casino.

Further investigation by the casino found that the same person had previously supplied a different casino identity card for other transactions on the same day. Significant cash transaction reports (SCTRs) submitted to AUSTRAC also linked the syndicate member to four other gaming chip cash-outs totalling AUD59,000 over a 14-month period (16). The cash-outs were either conducted on the same day, or in the same week.

Two members of the syndicate were charged with fraud-related offences. One was sentenced to two years and three months imprisonment and the other to 12 months.

Offence

  • Fraud
  • Money laundering

Customer

  • Individual
  • Business

Industry

  • Banking (ADIs)
  • Gambling services

Channel

  • Electronic
  • Physical

Report type

  • IFTI
  • SCTR
  • SMR

Jurisdiction

  • Domestic
  • International – Malaysia

Designated service

  • Account and deposit-taking services
  • Gambling services

Indicators

  • Multiple chip cash-out occurring on the same day
  • Significant chip cash-out with minimal play at a casino
  • Use of false identification

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Case 14 – Welfare recipients found with $75,000 cash and 15 kilograms of cannabis

AUSTRAC information helped initiate an investigation that resulted in the arrest of three suspects and the seizure of approximately 15 kilograms of cannabis. Authorities restrained a number of assets, including AUD100,000 in cash suspected to be the proceeds of crime, a property and numerous vehicles.

One suspect was sentenced to four years and 10 months imprisonment. The other suspect received a suspended sentence of two years and nine months imprisonment.

Information held by authorities indicated that a woman (suspect A) and husband (suspect B) had accumulated substantial assets, which was inconsistent with their declared income.

Additionally, a credit union submitted a suspicious matter report (SMR) detailing the financial activities of the suspects. AUSTRAC forwarded the SMR to authorities, which detailed the following:

  • suspects A and B held a joint account with the reporting entity
  • suspect A telephoned the credit union and indicated that she wanted to withdraw AUD15,000 cash from her personal account
  • credit union staff advised the suspect that withdrawing AUD15,000 cash required the completion of a significant cash transaction report (SCTR)
  • over two consecutive days, suspect A attended the credit union branch and withdrew AUD9,800 and AUD5,200 respectively.

The cash withdrawals totalled AUD15,000 and appeared to be 'structured' into two separate transactions to avoid the SCTR requirement (17). Subsequent investigation of the account activity by social welfare investigators identified that:

  • suspects A and B received government welfare payments          
  • a large number of transactions were made at a casino
  • the account received large cheque deposits.

Analysis of AUSTRAC information identified additional SMRs submitted by a credit union. The SMRs included the following information:

  • suspect A was a signatory to a credit union account held in a relative's name
  • suspect A periodically deposited cash into the relative's account. Over a one-month period the relative's account received four cash deposits totalling AUD20,000 structured into amounts ranging from AUD2,000 to AUD9,000
  • suspect A attended a branch of the credit union with her relative and they deposited AUD9,000 and AUD6,000 cash respectively into their personal accounts, at different counters
  • credit union staff observed that the relative appeared 'nervous' while conducting cash deposits
  • a cheque for AUD50,000 was withdrawn by the relative from his account to purchase a motor vehicle.

Enquiries conducted by authorities identified that:

  • over a six-year period approximately AUD1.37 million was deposited into the accounts of suspects A and B
  • the suspects purchased numerous assets including a house, two motor vehicles and three motorcycles
  • suspect B frequently travelled overseas.

Analysis of AUSTRAC information showed that in the same year the SMRs were reported to AUSTRAC, suspect B completed an international currency transfer report (ICTR), which indicated he was carrying cash worth approximately AUD16,000 when he departed Australia for the Philippines (18).

Enquiries showed that suspects A and B's income did not support their lifestyle. The SMRs, combined with information held by authorities, prompted law enforcement to investigate the suspects' unexplained wealth.

Further law enforcement investigations revealed that suspects A and B had obtained approximately 15 kilograms of cannabis and were arranging for a courier (suspect C) to transport the cannabis interstate.

Law enforcement officers intercepted a motor vehicle and found the cannabis concealed in the side panels of the vehicle. Suspect C was arrested and charged with possessing cannabis for sale or supply.

A search warrant was executed at suspect A and B's home. Authorities seized approximately AUD75,000 cash, numerous receipts for goods worth AUD400,000 purchased using cash, and various documents that indicated suspects A and B were trafficking in cannabis. Suspects A and B were arrested.

Suspect A pleaded guilty to:

  • aiding, abetting or procuring another to traffic in a substance that is a controlled drug under the Criminal Code Act 1995
  • jointly possessing approximately AUD75,000 being the proceeds of crime under the Criminal Code Act
  • jointly dealing with approximately AUD330,000 being the proceeds of crime under the Criminal Code Act
  • possessing a motor vehicle being the proceeds of crime under the Criminal Code Act.

Suspect A was sentenced to four years and 10 months imprisonment.

Suspect B died and court proceedings against him were discontinued.

Suspect C pleaded guilty to possessing cannabis for sale or supply and received a suspended sentence of two years and nine months imprisonment.

Law enforcement restrained a house, two motor vehicles, three motorcycles, approximately AUD75,000 in cash and AUD25,000 in a bank account.

The social welfare investigation revealed both suspect A and B had each accumulated debts of AUD69,944.45 for welfare payments they were not entitled to.

Offence

  • Drug trafficking
  • Money laundering
  • Welfare fraud

Customer

Individual

Industry

Banking (ADIs)

Channel

Physical

Report type

  • ICTR
  • SMR

Jurisdiction

Domestic and international – Philippines

Designated service

Account and deposit-taking services

Indicators

  • Account activity inconsistent with customer profile
  • Customer and relative(s) attend the same branch and make structured cash deposits into their own accounts at the same time
  • Customer is a signatory to a relative's account and makes large cash deposits to the account
  • High-value cash deposits
  • Regular or multiple deposits below the AUD10,000 reporting threshold (that is, structured cash deposits)
  • Third-party or relative appears to be nervous while conducting transactions

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Footnotes

  1. For information about digital currency exchanges see 'Digital currencies and virtual worlds', AUSTRAC Typologies and case studies report 2012, pp. 16–17.
  2. See the Glossary for a definition of 'structuring'.
  3. See the Glossary for a definition of 'structuring'.
  4. See the Glossary for a definition of 'home equity line-of-credit fraud'
  5. See the Glossary for a definition of 'structuring'.
  6. 'Chip buy-in' is the process of converting cash into gaming chips to be used in casino gambling.
  7. See the Glossary for a definition of 'structuring'.
  8. See the Glossary for a definition of 'structuring'.
  9. See the Glossary for a definition of 'structuring'.
  10. See the Glossary for a definition of 'high-risk jurisdiction'.
  11. 'Tax evasion' involves taxpayers deliberately breaking the law and dishonestly abusing the tax system to obtain a financial benefit.
  12. 'Tax avoidance' involves taxpayers avoiding tax by deliberately using arrangements that provide tax benefits that are outside the intent of the law. See the ATO website for more information.
  13. The term 'group' is used here in its ordinary sense, rather than its legal sense under the Corporations Act 2001.
  14. See the Glossary for a definition of 'round robin tax evasion scheme'.
  15. See the Glossary for a definition of 'high-risk jurisdiction'.
  16. See the Glossary for a definition of 'chip cash-out'
  17. See the Glossary for a definition of 'structuring'
  18. Under the Financial Transaction Reports Act 1988, international currency transfer reports (ICTRs) were submitted when currency (coin or paper money) of AUD10,000 or more (or the foreign equivalent) was carried, mailed or shipped into or out of Australia.

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Last modified: 21/12/2015 10:19