Anti-Money Laundering Case Studies and the role of AUSTRAC
What kinds of money laundering are being detected by AUSTRAC in Australia?
The Nyman Gibson Miralis money laundering lawyers have put together some examples of money laundering in Australia which demonstrate the wide variety of methodologies that are being used.
The examples also highlight the complexity of money laundering cases, where new cyber technologies such as digital currencies are being used to facilitate money laundering as well as professional facilitators.
What are some methods of money laundering being detected by AUSTRAC?
How are virtual currencies used for money laundering?
AUSTRAC was part of an investigation which led to the arrest of an individual who used digital currency to purchase, import and sell prohibited drugs through a black market website.
AUSTRAC uncovered multiple international funds transfers made by the suspect to a digital currency exchange in order to purchase a digital currency. The funds were transferred via banks to an online digital currency exchange based overseas, allowing the suspect to purchase an amount of digital currency. The use of digital currencies provides a degree of anonymity for users.
The suspect was successfully charged and convicted with drug importation and trafficking offences.
Digital currencies and the regulated anti-money laundering (AML) / combating terrorism funding (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.
What are money laundering facilitators and what work do they perform?
How are professional services (lawyers, accountants, notaries) used for money laundering?
AUSTRAC investigations revealed that 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. These are small deposits of amounts below the required reporting threshold, which are made in order to circumvent the reporting requirements.
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.
The cash and cheques were deposited into an account held by the suspect, an accountant. He regularly consolidated the funds from the various deposits and transferred the funds electronically to third-parties. Although the exact source of the funds is unknown, authorities identified possible links between the funds and the importation of drugs into Australia.
How are underground banking/alternative remittance services/hawala used for money laundering?
AUSTRAC provided financial information which assisted an investigation into a remitter suspected of laundering funds for criminal syndicates.
The remittance company reported sending AU$6 million to Iran and Iraq on behalf of legitimate customers. However, a comparison with reports generated by banks which dealt with the remittance business as a customer showed that the remitter only sent AU$3.66 million, resulting in a shortfall of AU$2.34 million. In addition, data from the bank also showed that the remitter made significant cash deposits totalling AU$3.14 million.
The director of the remittance company was charged and pleaded guilty to dealing with money reasonably suspected to be the proceeds of crime.
How is the internet (encryption, access to IDs, international banking) used for money laundering?
The suspect was wanted in the United States for cybercrime and fraud-related offences, where it was alleged that the he was part of an organised crime group that stole more than US$30 million from victims in the US through an elaborate home equity line-of-credit fraud.
Australian authorities analysed three SMRs submitted by reporting entities, which included information about multiple aliases used by the suspect. 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, which reporting entities considered to be suspicious; for example, deposits of large amounts from other countries to the suspect’s Australian bank account which were inconsistent with the café’s established customer profile. The suspect also withdrew large amounts of cash in amounts designed to avoid reporting requirements from various banks in a short period of time.
Laundering of proceeds from tax offences
Authorities investigated a tax evasion scheme promoted and facilitated by an accountant in Australia. The scheme consisted of using false invoices and loans to avoid tax. A client of the accountant defrauded the Commonwealth government of AU$2 million.
Suspect A and his wife were directors and shareholders of Company 1. Suspect A was also director and shareholder of Company 2, with an associate of his as co-director. The accountant controlled Company 3, which was registered in Hong Kong and had a bank account in Australia. Company 3 was used to issue false invoices to Company 1 and 2.
False invoices for ‘brokering services’ were issued by Company 3 to Companies 1 and 2, which paid those invoices. The accountant then took a small portion as payment for his role, then returned that money through various transactions designed to evade tax reporting requirements to Suspect A and individuals associated with him.
Facing charges? Obtain specialist advice and assistance
Nyman Gibson Miralis's lawyersare experts in assisting companies and individuals who are the subject of investigations by AUSTRAC, the Australian Federal Police (AFP), the (Australian Taxation Office (ATO) and the Australian Crime Commission (ACC) for suspected money laundering activities.
Nyman Gibson Miralis has specialised knowledge of the substantive laws under which these agencies operate and the practice and procedure of investigations and prosecutions.
Our unique point of difference from other law firms is that we have been involved in most of the significant litigation in relation to money laundering allegations in Australia and have acquired expertise as litigators and trusted legal advisors concerning money laundering investigations and prosecutions.
We are widely recognised as being experts in transnational money laundering investigations and have been involved in advising in investigations involving the USA, Hong Kong, Singapore, China, Cambodia, Cyprus, Russia, New Zealand, South Korea and Europe, where there has been an Australian connection.
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