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AUSTRAC referral helps catch unregistered remitters

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An AUSTRAC referral was the catalyst for a law enforcement investigation into two unregistered remittance businesses operated by two offenders. The offenders were arrested after search warrants were executed by law enforcement. They were found guilty of operating an unregistered remittance service and money laundering offences, and received suspended sentences between 24 to 26 months each. Over $2 million in funds seized during the investigation was forfeited as the proceeds of crime.

Indicators

The following indicators may be helpful to identify similar criminal activity.

  • Multiple regular large cash deposits, greater than the AUD10,000, into a remittance business bank account on the same day at the same branch by an entity related to the business.

  • Multiple cash deposits into a remittance business bank account resembling attempts at structuring, for amounts below the AUD10,000 reporting threshold.

  • Regular cash deposits by operators or entities linked to remittance business, into their personal and third-party bank accounts, followed by outgoing international funds transfer instructions (IFTIs).

  • Remittance businesses showing the abovementioned transaction activities and linked via the same address, owners, and/or account signatories.

  • Remittance business showing the abovementioned transaction activities and not recorded on the Remittance Sector Register (RSR).

Investigation outline

AUSTRAC identified two companies (A and B), operated by a couple and conducting business under the same trading name, that provided remittance services while unregistered. Company A was required to be registered on the RSR. AUSTRAC informed company A of its requirement to register and the consequences of providing a remittance service without registration. Following notifications, company A submitted two applications that were deemed invalid due to incomplete information. Company A then submitted a final application which was assessed by AUSTRAC and subsequently refused. Approximately one month later an application was submitted for a related company, company B, which was also refused.

Both applications were refused by AUSTRAC on the basis that the companies: provided false declaration in their application; failed to have a compliant anti-money laundering and counter-terrorism finacing (AML/CTF) program; and provided a remittance service while not registered. Additionally, company A was refused for failing to advise the AUSTRAC CEO of the conviction of one of its key personnel, and for providing IFTI reports to AUSTRAC that were late and contained incorrect information. Company B was also refused for failing to obtain a National Police Certificate for one of its key personnel.

Following an AUSTRAC referral, law enforcement executed a search warrant. Approximately $1.45 million in cash was seized during the search and other evidential material including customer information and international money transfer receipts. Search warrants on three Victorian commercial premises also yielded the seizure of business records such as transaction invoices and customer records.

The two offenders were arrested and charged. As a result of the arrests, law enforcement obtained further information from the offenders confirming aspects of the remittance activity, including: the businesses were conducting remittances to Vietnam; details of the customer invoicing process; and details of commission payments and domestic bank accounts.


Industry contribution

Suspicious matter reports (SMRs) submitted by reporting entities revealed the following.

  • An employee (accountant) of company A made regular cash deposits into its business account. Three separate deposits were conducted on the same day at the same branch ($71,000, $58,565 and $24,250 respectively). Five $50 notes were identified as counterfeit.
  • Seventy cash deposits into company A’s account over a nine-month period, ranging from approximately $500 to $290,000 and totalling just over $800,000, were made at various branches. Forty of the deposits ranged between $6,000 to $9,930, totalling $325,760, resembling attempts to structure amounts to avoid threshold transaction reporting requirements.
  • A personal account belonging to one of the offenders showed six electronic funds transfers ranging from $30,000 to $50,000, totalling over $300,000, received from various third parties over a three-month period. Some of the funds were subsequently withdrawn as cash for amounts of $16,000 and $34,000.
  • A $200,000 cash deposit was made by one of the offenders, and a total of $418,000 transferred from company A, into the personal account of a third party unrelated to the remittance business. The funds were dispersed across another personal account in addition to being withdrawn as cash.

AUSTRAC contribution

Following an internal investigation, AUSTRAC referred the companies and directors to law enforcement for criminal investigation.  AUSTRAC provided law enforcement with financial intelligence reports prior to and during the investigation, focusing on the reporting and transaction activities of the companies and related entities. Key findings included the following.

Company A

  • A discrepancy between the value of IFTIs remitted by company A and the value of IFTIs reported to AUSTRAC.
  • No SMRs were lodged against any of its customers despite the high volume of transactions and value of funds remitted.
  • Large cash deposits totalling over $25 million used to fund IFTIs.

Company B

  • Linked to the same address and directors of company A, who were also signatories to the company B account. Both companies were transferring to a common beneficiary bank in Vietnam.
  • Showed similar financial activity to company A, involving large cash deposits to company accounts and the remittance of funds to Vietnam. Despite remitting over $9.6 million overseas, no IFTI reports were submitted to AUSTRAC.
  • Large cash deposits to personal and third-party bank accounts, which were used to fund outgoing IFTIs sent by the operators to Vietnam.

Additionally, AUSTRAC provided witness statements to law enforcement during the investigation. The statements contained a timeline of correspondence outlining the frequency of notifications given to both companies by AUSTRAC in relation to their registration and the subsequent refusal of their applications. They also contained details of the total value and volume of threshold transaction reports (TTRs) and IFTI reports submitted to AUSTRAC in response to a request by law enforcement.


Outcome

In October 2016, the offenders pleaded guilty to operating an unregistered remittance service and money laundering offences, and received suspended sentences between 24 to 26 months each. Additionally, over $2 million of funds were seized and forfeited as a result of the law enforcement investigation.


Case study summary

Offence

Money laundering

Unregistered remittance services

Possessing the proceeds of crime

Customer Business
Industry Remittance services
Channel Electronic
Report type

IFTI

TTR

SMR

Jurisdiction

Domestic

International - Vietnam

Designated service Remittance
Last modified: 22/09/2017 13:44