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Guns, drugs and pistons

Guns and cocaine

AUSTRAC supported a law enforcement investigation into a criminal syndicate suspected of importing firearms and illicit drugs into Australia from the United States via sea cargo. AUSTRAC analysis of transaction reports submitted by industry matched payments made to suspect entities in Tennessee from ordering customers based in Australia linked to various consignments imported into Australia.

AUSTRAC data analysis also assisted in identifying aliases used by the members of the syndicate. Further analysis into the activity of the aliases, uncovered names and details of four receiving entities in Tennessee, and eight entities sending funds from Australia previously unknown to investigators.

All transactions were conducted using the same remittance service for values under the AUD 10,000 reporting threshold.

During the investigation stage, AUSTRAC's monitoring of the syndicate's fund flows identified an associate of the syndicate who was later arrested and convicted for importing 1.72 kg of cocaine into Australia via the United States.

The primary suspect pleaded guilty to six offences and was sentenced to 35 months imprisonment.

Indicators

The following indicators may help identify similar criminal activity:

  • multiple International Funds Transfer Instructions (IFTIs) in amounts just below the 10,000 Australian dollar threshold for cash transaction reporting
  • individuals conducting separate IFTIs via multiple branches of a remittance provider located in suburbs within close proximity
  • a high volume of IFTIs sent by individual's to a recipient beneficiary customer with a different last name and listing the reason of payment as 'gift' or 'family support'

Investigation outline

The investigation centred on a well-known Australian criminal syndicate, with an extensive criminal background in car re-birthing, card skimming and the lodgement of fraudulent skimming claims. The syndicate had links to Dubai and Europe and was known for importation of commercial quantities of drugs, importation of firearms and exporting stolen vehicle components.

The investigation focused on funds transferred via a remittance service to the syndicate's associates in the USA for the legal purchase of the firearms. In the USA, the legally purchased weapons were hidden inside ­hollowed-out car engine blocks along with illicit drugs, to be smuggled within these components to automotive industry facilities in Australia.

Further to this, records of the gun purchases and engine shipments closely matched the prime syndicate member's multiple visits to ­Nashville.

United States Customs and Border Protection intercepted one consignment in Los Angeles, and discovered cocaine hidden inside engine pistons. US Customs confiscated the cocaine and arranged a controlled delivery and surveillance of the shipment to Australia.

Australian law enforcement reconstructed the consignment and delivered it to the prime suspect's associate. The associate's movements were kept under surveillance, resulting in the arrest and conviction of one Australian suspect.

The investigation also resulted in the detection and closing down of a supply route for illegal firearms and drugs between Tennessee and Sydney.

Industry contribution

Transaction reporting by banks and remitters assisted with the investigation. AUSTRAC received five suspicious matter reports (SMRs) relating to two members of the syndicate.

One SMR detailed the main syndicate member's use of multiple accounts and aliases with various financial institutions.

Two other SMRs related to the primary suspect and another associate's involvement in illicit activity such as card skimming and lodging fraudulent skimming claims.

The IFTIs sent by syndicate members to one or more common beneficiaries in Tennessee were used to identify associates in the USA.
IFTI reporting showed that members of the syndicate sent approximately AUD51,000 to the same beneficiaries in the United States, where the funds were used to purchase weapons legally.

AUSTRAC contribution

AUSTRAC information was crucial in confirming the identity of the entities receiving these funds in the Tennessee and liaison with international partners provided personal information obtained during the investigation AUSTRAC produced two financial intelligence assessments that assisted the investigation by enabling investigators to:

  • match payments made to entities in the United States with consignments being imported into Australia, confirmation of the entities involved in the importations and match the travel of key suspects to the United States
  • gain a thorough understanding of the suspects involved in the syndicate by uncovering aliases used by syndicate members and associated names, accounts and addresses
  • uncover and assess previously undetected potential suspects undertaking similar activities to that of the syndicate.

SMR's submitted by AUSTRACs industry partners linked the activity of the primary suspect and another associate of being involved in card skimming and lodging fraudulent skimming claims through legitimate businesses.

Outcome

Three suspects in the United States were arrested. Three suspects were arrested in Australia.

One Australian suspect was charged and convicted in the New South Wales District Court for attempting to possess a marketable quantity of an unlawfully imported border controlled drug under subsections 307.9(1) and 11.1(1) of the Criminal Code Act 1995. The appeal to his conviction was dismissed in July 2015.  

Two Australian suspects were extradited to the United States and both faced charges in the United States District Court Middle District of Tennessee of;

  • Delivered Firearms for Shipment to Person who were not Licensed Firearms Dealers, Manufacturers, Importers or Collectors, and;
  • Possession with Intent to Distribute 500 Grams or More of Cocaine.

The primary suspect's associate pleaded guilty to the above mentioned two offences and was sentenced in May 2015 to 30 months imprisonment for each count to run concurrently.

The primary suspect was additionally charged with Making False Statements During the Acquisition of Firearms. He pleaded guilty to six offences and was sentenced in June 2015 to 35 months imprisonment for each count to run concurrently.

Case study summary

Offence

Firearm, illicit drug trafficking

Customer

Individual

Industry

Remittance services

Channel

Electronic, Physical

Report type

IFTI, TTR, SMR

Jurisdiction

Domestic, International – USA

Designated service

Remittance services (money transfer)

Last modified: 07/12/2016 11:14